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.
Nigeria On Path To Food Sufficiency As Buhari Unveils Mega Rice Pyramids
With the unveiling of 13 rice pyramids (one million bags of rice) President Mohammadu Buhari today, the country is no doubt on a path is to self-sufficiency in food production.
Investors King gathered that the president, today, unveiled the FCT Mega Rice Pyramids in Abuja.
The rice pyramid, considered to be the biggest of its type in Africa, is located on the grounds of the Abuja Chamber of Commerce and Industries (ACCI) on Airport Road.
The one million rice paddy which was stacked in 15 separate pyramids at the ACCI is in collaboration of the Central Bank of Nigeria (CBN) with the Rice Farmers Association of Nigeria (RIFAN), planted and harvested from states across the country under the Anchor Borrowers’ Programme (ABP). Farmers were asked to return the bags of rice paddy that made up the pyramids in exchange for cash in order to repay the loans they received under the ABP.
Investors King recalls that the CBN’s ABP which started in November 2015 had the goal of providing aid to farmers and influencing the value chain of various commodities in Nigeria. The CBN, in 2019, revealed that it disbursed the sum of N791 billion to more than 3 million farmers across the 36 states of the Federation, under the ABP as part of its efforts towards diversifying the economy and assisting farmers with the provision of farm inputs and cash to smallholder farmers.
The president, who commissioned the pyramid, disclosed that the ABP is expected to catalyse the agricultural productive base of the nation, which is a major part of the government’s economic plan to uplift the economy, create jobs, reduce reliance on imported food and industrial raw materials, and conserve foreign exchange.
According to the CBN governor, Godwin Emefiele, the CBN, in collaboration with the rice farmers have significantly improved the productivity per hectare of the smallholder farmer from about 2.4 metric tonnes per hectares in 2015 to between about 5 metric tonnes per hectares in 2021.
The RIFAN has over 12.2 million members across the 36 states of the country who are involved in rice farming, milling, storage and management, trading and marketing, export, research and training and allied businesses.
Nigeria’s Inflation Rate Rose in December After 8-month Decline– NBS
The National Bureau of Statistics, on Monday announced that Nigeria’s annual inflation rate has risen to 15.63 percent in December 2021. This was higher than the 15.40 percent recorded in November 2021 when the headline inflation moderated for eight consecutive months. The increase is likely due to the usual surge in the prices of goods and services around Christmas time.
The report stated, “This is showing a slowing down in the rate when compared to the corresponding period of 2020.
“Comparing the rate to the year-on-year performance in the previous months shows that the rate has increased.
“Also, comparing the rate of price change between December and November (month-on-month) shows that the headline index rose by 1.82 per cent in December 2021. The November figure was 1.08 per cent. The rise was in part driven by a continued surge in food inflation.”
According to NBS, the composite food index increased by 17.37 per cent in December 2021 down by 2.19 per cent points compared to the 19.56 per cent obtained in December 2020.
“The average annual rate of change of the Food sub-index for the twelve months ending December 2021 over the previous twelve-month average was 20.40 per cent, 0.22 per cent points lower from the average annual rate of change recorded in November 2021 (20.62) per cent,” it said.
It further mentioned that the rise in the food index was as a result of increases in prices of bread and cereals, food products, meat, fish, potatoes, yam and other tubers, soft drinks and fruits.
The statistics showed that on a month-on-month basis, the food sub-index increased by 2.19 per cent in December 2021, up by 1.12 per cent points from 1.07 per cent obtained in November 2021.
Manufacturing Activities, Macroeconomy Witness Gradual Growth in Q4 2021: MAN
The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s macroeconomy and manufacturing operating environment were buttressed by the marginal recovery of some key manufacturing indicators allowed a gradual improvement in the fourth quarter (Q4) of 2021.
In its Manufacturers CEOs Confidence Index (MCCI) Q4 report, the President of the association, Mr. Mansur Ahmed clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the fourth quarter performance is better than what was obtained in the 2021 Q3.
The MCCI is an index set up by MAN to measure changes in the quarterly pulsation of manufacturing activities in relation to movement in the macroeconomy and government policies. The Index is considered as MAN’s barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy.
In the report, Ahmed stated that manufacturers’ resilience, seasonal transactions, and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax-related challenges faced by manufacturers.
The manufacturing sector in Q4 of the year under review, overall recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambiance evidenced by the high points. This he said, cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.
“Manufacturing performance is still below the mark,” Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints. Some of these challenges enumerated by manufacturers are clearly presented in this report.”
The president further advised the government to implement mechanisms such as providing incentives to encourage investments in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also beckoned on the government to specifically provide security to lives and investments in industrial areas.
“In order to improve the performance of the sector, the government needs to intentionally put in place a mechanism that will address these challenges permanently by considering and implementing the following recommendation:
“Further incentivize investment in the development of raw materials locally through the Backward Integration and Resource-based industrialization initiates. Government should call for more investors to key into these initiatives with appropriate and definite incentives.
“For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.
“Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” Ahmed stated.
The MAN president in the MCCI report stressed the need to ensure effective allocation of available foreign exchange to productive sectors, especially to the manufacturing sector for the importation of raw materials and vital machines and equipment that are not available locally.
He also buttressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures to improve forex supply to manufacturing concerns.
He said that the Ministry of Science Technology and Innovation should be directed to inaugurate the Secretariat that will implement the strategies for the Executive Order and the Standard Organisation of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (Liquefied Petroleum Gas) Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the government for 12 States in the federation.
Ahmed added, “Return milk and other dairy products to the National list in the fiscal policy guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the dairy production.
“Unify academic curriculum with industrial skill needs and requirements to guarantee the sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with the skills requirements of industries. The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.
“Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change the narrative on the operating environment from being a high cost to low production cost environment.”
On electricity, Ahmed said there is a need to sustain the eligible customer initiative to ensure that more power is supplied to the manufacturing sector.
The Manufacturing Association of Nigeria in its Index Report, further adviced the government to, “Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;
“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector, Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies.
“Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible.”
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