Abuja fuel queues persist as oil hits $66 ahead of OPEC meeting

The price of crude oil (Brent) itched close to $66 a barrel at the close of business on Monday, the highest since its biggest slump last November.

This is coming ahead of a meeting of the Organisation of Petroleum Exporting Countries on Thursday.

But fuel queues have persisted in Abuja and there are fears that it may spread to other parts of the country as many filling stations are not selling the product, following continued increase in crude price at the international market.

The situation has continued to cause traffic snarls in the Federal Capital Territory (FCT), including Olusegun Obasanjo Way and Sultan Abubakar Way.

The seeming scarcity of the product in parts of the country is based on the fact that pump price of petrol is tied to the price of crude oil in the international market under the deregulation of the downstream sector of the petroleum industry.

While the US oil price rose by 2.2 per cent to $62.90 a barrel, after opening at $61.53, and hitting a low of $61.53, the Brent crude rose by 2.2 per cent to $65.90 a barrel, after opening at $64.50, and hitting a low of $64.50.

The US crude lost 3.0 per cent on Friday while Brent crude futures fell 3.9 per cent, in their second straight daily loss on profit-taking from a 13-month high.

However, the crude oil rebound came after the commodity took a pause on Friday on profit-taking from a 13-month high, partly due to hopes about the United States stimulus measures and the latest positive updates regarding the COVID-19 vaccines.

Oil prices gained around 17.5 per cent in the fourth consecutive monthly gain, as the oversupply concerns receded after OPEC+ compliance with the agreed supply cuts and Saudi Arabia’s voluntary cut.

The fuel queues may spread to other parts of the country despite assurances by the NNPC that it is not planning any increase in the pump price of petrol this month.

Amid fears that the NNPC may hike the pump price of petrol, retailers have tightened sales on the grounds of supply scarcity from depots where they alleged that ex-depot price has gone up, despite assurances by the Nigerian National Petroleum Corporation of no price adjustment.

The corporation, in a statement, had said that contrary to speculations of an imminent increase in the price of petrol in the country, the ex-depot price of petrol in March would remain unchanged.

It is not clear how OPEC will act when members gather on Thursday, with the Saudi Arabian Energy Minister, Abdulaziz Bin Salman, calling for producers to remain “extremely cautious.”

Oil’s recovery from the impact of the pandemic has been driven by Asian demand, as well as fiscal and monetary stimulus as data showed most key manufacturing economies gained ground last month, with China staying in expansionary territory.

Positive sentiment in equity markets also aided crude, while President Joe Biden’s $1.9 trillion relief plan moved closer to realisation after passage at the House of Representatives.

Saudi Arabia’s output curbs, the improving demand outlook as vaccines are rolled out, and the growing popularity of commodities as a hedge against inflation have pushed oil higher this year.

There have been indications in recent weeks that the rally will continue as the producer response trails consumption, while maintenance in North Sea fields is set to reduce supply.

At stake in Thursday’s meeting is how much OPEC+ output gets restored and at what pace, with current reductions amounting to just over seven million barrels a day, or 7 per cent of global supply.

The 23-nation coalition will decide whether to revive a 500,000-barrel tranche in April, and in addition, whether the Saudis confirm an extra one million barrels they have taken offline will return as scheduled.

The freeze-driven shuttering of core sections of the US refining system isn’t all good news for rival plants in Europe because down at the bottom of the barrel, losses are deepening.

Kazakhstan relaxed its oil production restraint in February, allowing output to jump to its highest since the current OPEC+ supply pact came into effect at the start of May.

Reacting to the fuel queues, the Group General Manager of the Public Affairs Division at the NNPC, Dr Kennie Obateru, said the corporation had no plan to raise the price of petrol in March in order not to jeopardise ongoing engagements with organised labour.

It warned petroleum products marketers not to engage in an arbitrary price increase or hoarding of petrol so as not to create artificial scarcity and panic buying.