TheNewsGuru

Tag: Oil Price

  • Oil slides on China trade slump, but crude imports remain high

    Oil prices fell by almost 1 per cent on Monday, with Brent crude slipping below $60 per barrel.

    This followed a Chinese data showing weakening imports and exports in the world’s biggest trading nation and second-largest crude oil consumer.

    International Brent crude oil futures were at $59.91 per barrel at 0403 GMT, down 57 cents, or 0.9 per cent from their last close.

    U.S. West Texas Intermediate (WTI) crude futures were down 47 cents, or 0.9 per cent, at $51.12 a barrel.

    China’s December overall exports fell by 4.4 per cent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world’s second-largest economy.

    Imports last month also contracted, falling 7.6 per cent, the biggest decline since July 2016.

    “Crude futures were back in the red as trading began for a fresh week in Asia, in tandem with most of the region’s stock markets.

    “China early Monday reported $351.76 billion trade surplus in dollar terms for 2018, the lowest since 2013,” said energy consultant Vandana Hari of Vanda Insights in a note on Monday.

    The weak trade figures confirm a raft of indicators that have been pointing to an economic slowdown since the second half of 2018.

    “Producer price inflation has decelerated for six consecutive months, adding to other signs of cooling industrial activity (in China) amid weakening global demand,” rating agency Moody’s said in a note.

    Traders said the data pulled down crude oil futures and Asian stock markets alike, which had both posted modest gains earlier on Monday.

    Economic research firm TS Lombard said oil prices were capped as “the world economy is now slowing … limiting the scope for positive surprises in oil demand and hampering inventory reduction.”

    Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said “the deterioration seen recently in forward-looking economic data from the U.S. to Europe and China” meant that the upside for crude oil futures was likely limited to $64 per barrel for Brent and for $55 for WTI.

    Despite the weak Chinese trade data, the country’s oil imports remained sky-high in December at 10.31 million barrels per day (bpd).

    It held above the 10 million bpd mark for the second month in a row, on stock-building by small independent refiners who were trying to use up annual quotas.

    Amid this strong demand from the world’s biggest oil importer, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, have been cutting supply since late 2018, providing crude prices with some support.

    In the United States, drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873, energy services firm Baker Hughes said in a weekly report on Friday.

  • Oil hits $80, highest since Nov 2014 as Iran tension mounts

    Oil prices hit $80 a barrel on Thursday for the first time since November 2014 on concerns that Iranian exports could fall due to renewed U.S. sanctions and reduce supply in an already tightening market.

    Brent crude futures LCOc1 reached an intraday high of $80.18 while U.S. West Texas Intermediate (WTI) crude futures were up 57 cents at $72.06 a barrel, also their highest since November 2014.

    President Donald Trump’s decision this month to withdraw the United States from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC’s third-largest producer has given strong tailwind to oil prices.

    France’s Total on Wednesday warned it might abandon a multi-billion-dollar gas project in Iran if it could not secure a waiver from U.S. sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

    A rapid decline in Venezuela’s crude production has further roiled markets in recent months.

    “The geopolitical noise and escalation fears are here to stay,” said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer.

    “Supply concerns are top of mind after the United States left the Iran nuclear deal.”

    Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.

    But high oil prices could hit consumption, the International Energy Agency warned on Wednesday, lowering its global oil demand growth forecast for 2018 to 1.4 million from 1.5 million barrels per day (bpd).

    Asia’s demand is at record highs and with rising prices its crude could cost $1 trillion this year, about twice what it paid during the market lull of 2015/2016.

    The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd “this summer’’.

     

  • Reps approve 2018-2020 MTEF document, increase FG’s oil price benchmark to $47 per barrel

    The House of Representatives on Tuesday approved the 2018-2020 Medium Term Expenditure Framework, MTEF, while also increasing the oil price benchmark proposed by the Federal Government from 45 to 47 dollars per barrel.

    TheNewsGuru.com reports that President Muhammadu Buhari had shortly before presenting the 2018 appropriations bill to the National Assembly sent the document alongside the Fiscal Strategy Paper, FSP, to the house.

    In a letter read by the speaker of the house, Yakubu Dogara, the President said that the MTEF and FSP were structured against the backdrop of “a generally adverse global economic uncertainty.”

    During the consideration of a report presented to the house by its committees on finance, appropriation, aids, loans and debt management, legislative budget and research and national planing and economic development, the house also approved an exchange rate of N305 to a dollar and projected 2.3 million barrels of oil production per day.

    Some of the key recommendations are as listed below:

    (i) that 2.3 million barrels per day be retained as proposed by the Executive for the 2018 Budget;

    (ii) that $47 per barrel as the benchmark for the fiscal year 2018 be adopted. This is in consideration of the current positive outlook in the global oil market and expectation that OPEC and other allied oil partnership countries will sustain oil production “cuts deep” into 2018;

    (iii) that ₦305/US Dollar as proposed by the executive for the 2018 Budget be adopted. It is also advised that CBN should adopt measures to close the gap between the parallel market and the official exchange rate;

    (iv) that the projected ₦5.279 trillion for non-oil revenue in 2018 be adopted. In addition, revenue generating agencies should intensify efforts on collections and measures that would reduce revenue loss. Specifically, Pioneer status and Tax incentives must be beneficial to the economy;

    (v) that ₦1.699 trillion new borrowing for 2018 as proposed by the Executive be adopted. However, borrowing must be project-tied. In borrowing more, government must remain focused and ensure it is used to fund critical projects that will increase productivity and contribute to financing such debt;

    (vi)that the National Assembly should amend the relevant Sections of the Fiscal Responsibility Act and other extant laws;

    (vii)that a 3.5% growth rate be adopted, especially with the latest figures indicating a doubling of growth rate to 1.4% in third quarter, 2017.

  • We lost $1trn to dwindling oil prices – Barkindo

     

    The Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), Dr Mohammed Barkindo, on Monday disclosed that the organisation lost $1 trillion to oil price fluctuation.

    Barkindo, who is in Nigeria on a four-day working visit, said this at a world news conference organised by the Minster of State for Petroleum, Dr Ibe Kachikwu.

    According to him, the downturn, which lasted from 2014 to January 2016, meant that OPEC member countries could not earn about $1 trillion of oil revenue.

    He said the industry further lost $1 trillion in terms of deferred projects and outright cancellation of projects across its entire value chain.

    “We need consistent investments in order to maintain current production and take care of reserves and secure future supplies,” he said.

    He said it was agreed that non-members of OPEC be invited to build a platform of 24 producing countries to agree on a joint supply agreement seeking to adjust about 1.8 million barrels a day.

    “For the first time in history we were able to build a platform of 24 producing countries within six months in order to address the stock overhang which has been the variable to the supply equation that had sent this market off balance since 2014.

    “Today, I can confidently report that those three historic events have altogether changed the energy landscape and turned a historic page in oil for good.

    “We are on the course of pulling this industry out of the worst recession that we have entered to restore stability to the market on a sustainable basis that will allow investments to come back on a continuous basis,” he said.

    He commended the government for staying afloat during the price-crash, calling the period “the worst energy circle in recent memory’’.

    “ Some of us who have been around for quite a while have witnessed all these five circles and it is a consensus in terms of the gravity of this circle, prices have crashed by over 80 per cent from the fall of 2014 to January 2016.

    “How you survived as a government and as institutions under this great industry remains a miracle.

    “I visited all other countries and I have seen how they struggle but you have weathered the storm, I think the worst is behind us.’’

    He said the agreements reached by the cartel and non-OPEC members in Algiers and Vienna during their meetings in November and December 2016 were lifesaving measures as they had overcome market challenges.
    NAN