Brent crude slumped to the lowest price since mid-2004 amid speculation suppliers from the Middle East to the U.S. will exacerbate a record glut as they fight for market share.
Futures fell as much as 2.2 percent in London after a 2.8 percent drop last week. Producers are focusing on reducing costs amid the price decline, Qatar Energy Minister Mohammed Al Sada said Sunday at a gathering of Arab oil-exporting nations in Cairo. Drillers in the U.S. put the most rigs back to work since July, adding 17, data from Baker Hughes Inc. showed.
Oil has collapsed below levels last seen during the 2008 global financial crisis on signs the market’s oversupply will worsen. The Organization of Petroleum Exporting Countries effectively abandoned output limits at a Dec. 4 meeting, while the U.S. on Friday passed legislation that lifted a 40-year ban on crude exports.
“There hasn’t been any significant signs of a pick-up in demand and we haven’t seen any meaningful cuts to production,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Nothing has really changed in the oil market over the past couple of months apart from the price.”
Brent for February settlement slid as much as 82 cents to $36.06 a barrel on the ICE Futures Europe exchange, the lowest level in intraday trade since July 2, 2004. The contract was at $36.17 at 7:42 a.m. London time. Prices are down 37 percent this year, set for a third annual loss.
West Texas Intermediate for January delivery, which expires Monday, was 36 cents lower at $34.37 a barrel on the New York Mercantile Exchange. It dropped 22 cents to $34.73 on Friday, the lowest close since February 2009. The more active February contract was down 44 cents at $35.62. Total volume was about six times the 100-day average.
There’s no need to be pessimistic about oil prices, Qatar’s Al Sada said at the meeting of the Organization of Arab Petroleum Exporting Countries, which includes seven OPEC members. Crude is set to climb from current “very low” levels that are hurting producers, Iraqi Oil Minister Adel Abdul Mahdi said, without predicting when prices may rebound.
The number of rigs targeting oil increased to 541, Baker Hughes, an oilfield-services provider, reported on its website Friday. The Permian Basin in West Texas led the gains with five machines put back to work. U.S. crude stockpiles have expanded to 490.7 million barrels, more than 130 million above the five-year average, Energy Information Administration data showed last week.
The spread between Brent and New York futures has shrunk to the narrowest in 11 months amid speculation that the U.S. plan to allow domestic oil to be shipped overseas may ease the nation’s oversupply. The European benchmark crude was at a premium of 66 cents a barrel to the February WTI contract.
U.S. producers including Continental Resources Inc. and ConocoPhillips had been pressing for an end to restrictions on exports of most raw, unprocessed crude. While repealing the ban could allow unfettered access to supplies, driving the most important change in the country’s oil policy in more than a generation, buyers in the east may have a limited appetite for the quality of cargoes on offer.
Many Asian refiners are geared to process heavier, cheaper crude with higher sulfur content. The lighter and cleaner shale oil from the U.S. has also got about a third farther to come than alternative supplies from the Middle East, representing additional shipping costs.
UNGA 2021: The World has the Resources to End Hunger, African Development Bank Head tells UN Food Systems Summit
“The world has the resources to end hunger,” African Development Bank President Dr. Akinwumi A. Adesina said in a message on the first day of the United Nations Food Systems Summit.
Convened by UN Secretary General António Guterres, the event is billed by its organisers as “a historic opportunity to empower all people to leverage the power of food systems to drive our recovery from the COVID-19 pandemic and get us back on track to achieve all 17 Sustainable Development Goals (SDGs) by 2030.”
The summit brings together thousands of youths, food producers, members of civil society, researchers, the private sector, women and indigenous people, all of whom are participating both physically and virtually in the summit. It is taking place on the sidelines of the 76th UN General Assembly in New York.
In his opening address, Guterres said the participants represented “energy, ideas and the willingness to create new partnerships,” and was a time to celebrate the dignity of those who produce and create the world’s food.
Decrying the 246 million people in Africa who go to bed daily without food and the continent’s 59 million stunted children as “morally and socially unacceptable,” Adesina said that delivering food security for Africa at greater scale called for prioritising technologies, climate and financing.
“The $33 billion per year required to free the world of hunger, is just 0.12% of $27 trillion that the world has deployed as stimulus to address the Covid-19 pandemic. I am confident that zero hunger can be achieved in Africa by 2030,“ Adesina said.
The African Development Bank’s Feed Africa Strategy, through its Technologies for African Agricultural Transformation program – widely known as TAAT – has provided 11 million farmers across 29 African countries with proven agricultural technologies for food security. Food production has expanded by 12 million metric tons while saving $814 million worth of food imports.
“We are well on our way to achieving our target of reaching 40 million farmers with modern and climate-resilient technologies in the next five years,” the African Development Bank chief added.
At a meeting on food security in Africa organized by the Bank and the International Fund for Agricultural Development (IFAD) earlier this year, 19 African heads of state called for the establishment of a facility for financing food security and nutrition in Africa.
“The Facility for Financing Food Security and Nutrition in Africa should be capitalized with at least $ 1 billion per year,” Adesina said.
The welfare of the 70% of Africa’s population working in agriculture and agribusiness is a barometer of the state of the continent’s health. “If they aren’t doing well, then Africa isn’t doing well,” Rwandan president Paul Kagame said in a message at the official opening.
The many other heads of state and government who spoke on Thursday included, Prime Minister Mario Draghi of Italy, President Felix Antoine Tshisekedi of the Democratic Republic of Congo, Prime Minister Sheikh Hasina of Bangladesh and Prime Minister Jacinda Arden of New Zealand.
AfCFTA: Nigeria-South Africa Chamber Advocate Single Africa Passport, Free Visa
The Nigeria-South Africa Chamber of Commerce (NSACC) has called for a single Africa passport and a free visa to ensure the success of the Africa Continental Free Trade Area (AfCFTA) agreement.
Speaking on Thursday in Lagos during the chamber’s September Breakfast Forum, with the theme: `Perspectives on the Africa Continental Free Trade Area in Relation to Nigeria’, its President, Mr. Osayande Giwa-Osagie noted that AfCFTA would boost intra-African trade by 22 percent, adding that its implementation would impact positively on the Nigerian economy.
AfCFTA is a single continental market that adopts free flow of goods, services, and capital, supported by the free movement of persons across Africa.
Giwa-Osagie however said Nigeria must diversify its economy in order to harness the gains of the agreement.
“Current intra-African trade rated at 15 to 17 percent is low and the AfCFTA is expected to boost intra-African by 22 percent. Challenges to its implementation are lack of infrastructure, political instability and lack of economic diversification.
“This gives rise to the need for Nigeria to diversify its economy to harness the gains of the agreement. Given the importance of the free movement of people, there is a need for a free visa for Africa and a single Africa passport.
“While the implementation would help boost the Nigerian economy, the impact would be limited if there are no free movement of people,” he said.
Mr Jesuseun Fatoyinbo, Head, Trade and Transactional Services, Stanbic IBTC Bank, said the business community needed more clarification on tariff reduction or elimination under the agreement.
According to him, the little information available to corporate organisations with regards to tariffs may lead to holding back on investments.
“We have noted increased interests from global multinationals and other corporates in setting up facilities in Africa aimed at serving the continent and exporting abroad.
“So more transparency around tariff reductions both in terms of timelines and details of goods could prompt companies to act,” he said.
Fatoyinbo also called for more attention to the digitisation of trade processes across the continent. “Currently, trade in Africa is largely reliant on physical documentation and this is a major impediment. Policymakers need to prioritize regulatory amendments that allow for the digital signatures, a digital certificate of origin, digital bills of lading, and other documentation,” he added.
Nigeria Borrows $4 Billion Through Eurobonds as Order Book Peaked at $12.2 Billion
The Federal Government of Nigeria has raised a fresh $4 billion through Eurobonds, according to the latest statement from the Debt Management Office (DMO).
Nigeria had set out to raise $3 billion but investors oversubscription peaked at $12.2 billion, enabling the Federal Government to raise $1 billion more than the $3 billion it announced.
DMO said “This exceptional performance has been described as, “one of the biggest financial trades to come out of Africa in 2021” and “an excellent outcome”.
Bids were received from investors in Europe, America, Asia and several local investors. The statement noted that the quality of investors and the size of the Order Book demonstrated confidence in Nigeria.
The Eurobonds were issued in three tranches, details, namely seven years–,$1.25 billion at 6.125 per cent per annum; 12 years -$1.5 billion at 7.375 per cent per annum as well as 30 years -$1.25 billion at 8.25 per annum.
The DMO explained that the long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 –2023.
The Eurobonds were issued as part of the New External Borrowing stipulated in the 2021 Appropriation Act. DMO noted that the $4 billion will help finance projects state in the 2021 budget.
Nigeria’s total debt stood at $87.239 billion as at March 31, 2021. However, with the $4 billion new borrowing, the nation’s debt is now $91.239 billion. A serious concern for most Nigerians given the nation’s weak foreign revenue generation and rising cost of servicing the debt.
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