While crude has short-squeezed over 7% higher since the death of UK lawmaker Jo Cox, it is stumbling on fundamentals overnight as Reuters reports Nigeria has agreed a one-month ceasefire with militants including the Niger Delta Avengers in the oil-producing southern region, despite the NDA denying it a week ago.
Militant groups including the Avengers, who have claimed responsibility for a string of attacks on oil and gas facilities in recent weeks, could not immediately be reached for comment.
They say they want a greater share of Nigeria's oil wealth to go to the impoverished Delta region. Crude sales make up about 70 percent of national income and the vast majority of that oil comes from the southern swampland.
The latest attacks have pushed production to a 30-year low.
Last week the Avengers said they would negotiate with the government if independent foreign mediators were involved.
"It was very difficult getting the Niger Delta Avengers to the negotiating table but we eventually did through a proxy channel and achieved the truce," said the official, who asked not to be identified.
A second government official, who also wished to remain anonymous, said a "a truce was agreed" with militants.
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One wonders why suddenly the NDA decided to play ball with the hyperinflating government? Perhaps the same 'people' behind the sudden mysterious rise of the freedom fighters who control global oil prices is now more worried about the state of the global economy being able to handle higher oil prices?
And not helping matters, despite China's May crude imports from Russia and Iraq rising to a record...
- China’s imports of crude oil from Russia rose 34% y/y to record 5.24m mt, or 1.24m b/d, according to data released Tuesday by the General Administration of Customs.
- Imports of Iraq crude +57% y/y to a record 3.4m mt, up from April’s 3.14m mt
- Imports of Saudi crude +34% y/y at 4.08m mt, down from April’s 4.12m mt
- Imports of Iran crude +19.5% y/y to 2.63m mt, down from April’s 2.76m mt
- Imports of Angola crude -4.9% y/y to 3.1m mt, down from 3.98m mt in April
- Russia, Saudi, Iraq were China’s top 3 crude suppliers in May
Overall, it appears China demand is starting to rollover...
- China’s apparent oil demand fell 0.9% in May, according to data compiled by Bloomberg.
- Naphtha demand +21.1% y/y to 935k b/d
- Gasoline demand -1.7% y/y to 2.68m b/d
- Diesel demand -12.9% y/y to 3.17m b/d
So, the Nigeria deal will add supply and the China news cuts demand... now what happens next?