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Marketers Justify Selling Petrol Above N86.50 – Punch

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The reason why many filling stations across the country have refused to comply with the Federal Government’s directive to sell a litre of petrol for N86.50 as against the old pump price of N87 is because most of them had stockpiled the product in anticipation of a likely price increase by the government.

Compliance by filling station owners with the new pump price of N86.50 for a litre of petrol has not been great across the country even though the Department of Petroleum Resources, the regulator of the downstream petroleum sector, has vowed to punish defaulters.

In some instances, the filling station owners and managers have become more daring, displaying new prices above the stipulated maximum on their petrol dispensing pumps.

One of our correspondent actually bought petrol at a filling station along Gbongan Road, Osogbo, the Osun State capital for N110 per litre on Monday. The price was proudly displayed on the digital dispensing machine instead of the practice before of displaying the regulated price of N87 per litre, but the attendants would inform the buyer of a higher price and the difference would be calculated based on the volume bought.

When asked why the station’s management was bold to display N110 as the pump price, a female attendant simply said that was the instruction given by the owners.

The PPPRA had on Tuesday, December 29, 2015, announced that retail filling stations belonging to the Nigerian National Petroleum Corporation would from Friday, January 1, 2016, sell petrol at N86 per litre, while other marketers would sell the product for N86.5 per litre.

In Jos, the Plateau State capital, most major marketers are still selling at N87 per litre despite the N0.50 reduction in the fuel price. Only the NNPC mega stations have adjusted their pump price to the N86 stipulated by the PPPRA.

Some of the marketers told one of our correspondents that they could not afford to sell below that as they still had old stock.

One of the attendants, who simply identified himself as Ahmed, said the inconsistency in the Federal Government’s pronouncement prompted some marketers to hoard the product in anticipation of a price increase later.

“Our station discharged a full tanker before the New Year, but we were afraid of what the new price will be. However, we are for now sticking to the old price because we are still having our old stock,” he explained.

In Anambra State, a litre of petrol sold for N140 on the average on Monday as many filling station owners pretended not to have heard about the new price regime.

An attendant at a filling station in Awka said, “I don’t know about any new price for petrol. We sell a litre here for N140.”

A manager at a filling station, who pleaded anonymity said, “The new price you are talking about may be for government filling stations like those belonging to the NNPC and not for private filling stations.

“Besides, what we have here is old stock. We didn’t even buy at that price you are talking about.”

Filling stations in Enugu State have yet to comply with the Federal Government’s directive on the new pump price of petrol.

One of our correspondents, who monitored the situation on Sunday and Monday, observed that the product was being sold for between N120 and N150 per litre in different parts of the state.

In Oyo State, one of our correspondents found out that only a few independent marketers had the product and they sold a litre at prices ranging between N100 and N130.

Some of the independent marketers, who spoke on the development, said that they purchased the product at an inflated amount in Lagos.

“We are aware of the government’s directive but the truth is that we cannot sell at the government price when we purchased the product above N100 per litre in Lagos. Look around Ibadan and you will see that only independent marketers are selling the product. The major marketers cannot because they cannot buy at a high cost and sell at a loss,” he station manager of an independent filling station in Mokola area of Ibadan said.

In Niger State, independent marketers have not complied with the N86.50 per litre price regime as one of our correspondents who went round Minna, the state capital, on Monday observed that filling stations were selling the product at the old rate of N87 per litre.

The state Controller, DPR, Mr. Abdullahi Jankara, however, said he had not received any directive from the Federal Government on the new fuel price.

Filling stations in Uyo metropolis sold the product for N130 per litre on Sunday and Monday even as many of them did not open for business.

The only filling station seen selling petrol at N86 per litre was the NNPC mega station on Ikot Ekpene Road, Uyo.

A former Chairman of the Independent Petroleum Marketers Association of Nigeria, Mr. Victor Eteafia, said the downstream sector of the economy was facing a crisis.

In major cities in Ogun State, a litre of petrol was still sold for between N100 and N130 on Sunday and Monday.

In Rivers State, the product is selling for between N130 and N140 per litre as against the Federal Government’s new price regime of N86.5.

At Romans Filling Station located on Ada George Road, petrol has been selling for N130 per litre in the past one week. The filling station had been dispensing the product for N140 per litre before Christmas.

Also in Kogi State, it was gathered that the major marketers were selling the product at N87 per litre while other marketers still sell as high as N120 per litre.

The Kwara State Chairman, Independent Petroleum Marketers Association, Mr. Olanrewaju Okanlawon, said members of the body bought their current petrol stock at the old price and would comply as soon as they start buying it at the new ex-depot price.

A former Treasurer of the Independent Petroleum Marketers Association of Nigeria, Western Zone, Mr. Shina Amoo, told one of our correspondents in Osogbo that independent marketers could not comply with the directive on the new petrol price because they bought the product higher than the approved price.

He said, “I bought the product for N102 per litre on Thursday and later I bought it at N94.5 per litre. So, you don’t expect anybody who bought at those prices to sell a litre for N86; it is not possible.

“The price will continue to come down as supply increases. Government will not need to force anybody to reduce the price; the forces of demand and supply will determine the price.”

When contacted for comment on why some filling stations were not complying with the new pump price regime, the National President, Independent Petroleum Marketers Association of Nigeria, Mr. Chinedu Okoronkwo, said he expected all outlets to comply before the end of this week.

He stated that some of the filling stations still had old stocks, adding that they would have to adjust to the new price when they finish selling those stocks.

When asked if the government was still paying the marketers the bridging claims, Okoronkwo said, “There is still bridging fund. We have not been informed of any change.”

The Federal Government, through the Petroleum Equalisation Fund, pays bridging claims to the marketers to ensure that there is uniform pricing system across the country and ensure that each marketing company complies with the laws regarding the management of the transportation equalisation process.

The Deputy Manager, Communications, DPR, Mr. George Ene-Ita, said, “If they (filling station owners) don’t comply, we will sanction them; either we shut down the stations or fine them. Monitoring is a routine thing. We have a standing monitoring and compliance unit in the DPR. It is a routine procedure; it never stops.

“It is not just to monitor and enforce the government-regulated prices, but also to monitor and enforce compliance with all regulatory issues concerning the downstream. And that is going on; we are ensuring that every marketer and every facility owner complies with the new official pump price.

Informed that some marketers were selling at higher prices because they still had old stock, Ene-Ita said, “That does not concern us. Government did not stipulate two pump prices, one for old stock and one for new stock.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Gains Slightly on Thursday as China Eases COVID-19 Measures

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Oil prices rebound on Thursday following China’s announcement that it was easing COVID-19 measures imposed to curb the spread of the virus.

China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.

Brent crude rose 27 cents, or 0.4%, to $77.44 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 49 cents, or 0.7%, to $72.50.

“Today, we do see some green price action,” said Naeem Aslam, analyst at Avatrade. “Prices are oversold due to the intense sell-off for the past few days. However, the price action still doesn’t show a strong bullish bias.”

The 14-day relative strength index for Brent was below 30 on Thursday according to Eikon data, a level taken by technical analysts as indicating an asset is oversold and could be poised for a rebound.

Both Brent and U.S. crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new the restrictions on Dec. 5 aimed at Russian oil exports.

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Markets

Wind Out of the Sails

UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets are making small losses on Tuesday, while US futures are relatively unchanged ahead of the open.

The recovery rally has lost momentum in recent sessions which is understandable after that jobs report. That’s not to say optimism can’t and won’t return but that wages component was a huge body blow. Investors are a little winded and it may just take a little time to get their breath back.

The PPI data on Friday could offer a helping hand on that front but even then, it will be hard to ease the concern Fed policymakers will undoubtedly have about the pace of wage growth, consumer resilience and the still large savings buffer. None of this aligns with a swift and relatively pain-free return to 2% inflation.

RBA maintains flexible approach

The key takeaway from the RBA meeting today was flexibility. There is no pre-set path and while policymakers expect to need to raise rates at upcoming meetings, the data will dictate if so and by how much. That doesn’t help investors gage exactly what we can expect from the central bank but in such uncertain times, that makes a lot of sense. And you can see that reflected in the interest rate probabilities for the first quarter of next year. As it stands, no change or 25 basis points in February is a coin toss, while 3.35% in March (25bps above the current rate) is seen as being 50% likely with 25bps either side around 25% each. Clearly the RBAs communication strategy is going to plan.

Households feeling the squeeze this festive season

It will come as a surprise to no one that UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase. With inflation running at 11.1%, spending is falling well behind, as is the case with wages, which suggests people are buying less and being more selective with what they do this festive season. Again, what can you expect when the economy is probably already in recession amid a terrible cost-of-living crisis that hurts those worst off most. The road to recovery for the UK is going to be long and painful, it seems.

The only guarantee for oil markets

It’s been a volatile start to the week in oil markets, continuing in much the same way we ended last, with traders still working through the announcements from the G7 and OPEC+, as well as the latest Covid moves from China. In many way, none of the above improve visibility in the crude oil space; they arguably actually make the outlook more uncertain.

But the intial response to the above has seemingly been negative for crude prices, with the loosening of Chinese Covid curbs not enough to offset the $60 price cap and unchanged OPEC+ decision. The cap is probably viewed as a business as usual for now, with Russia reportedly selling below these levels already and improving its ability to get around the sanctions. Which means output remains broadly steady.

The move from OPEC+ was probably driven by the lack of visibility on China and Russia but as the group has warned in the past, should prices fall too far and the market become imbalanced, it won’t wait until the next scheduled meeting to respond. It seems that the only thing guaranteed in the oil market for now is volatility.

Gold paring losses

The dollar recovered strongly on Monday as trade became increasingly risk-averse, hitting gold and forcing it back below $1,800 where it briefly traded above. It’s attempting to pare those losses today, up around half a percent on the day but it may struggle in the short-term. It’s been an incredible recovery until now but Friday was a massive setback. We now have to wait for PPI on Friday for some good news, with Fed policymakers in the blackout period ahead of the final meeting of the year, next week.

Stabilising?

The risk-reversal trade on Monday took the wind out of bitcoins sails, not that it would have taken much in the circumstances. It’s trading back around $17,000 where it has spent most of the last week, which the community will probably be relieved about. Anticipating what’s going to come next for cryptos feels incredibly difficult and dependent on the ongoing fallout from FTX. To reiterate what I’ve said recently, silence is bliss.

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Markets

A Nervy Start to the Week

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower.

The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock markets higher into year-end. Perhaps it’s not quite so dramatic but it was a real setback, something we should be used to by now.

The wages component was the killer blow. That was not just a beat, it obliterated expectations and came in double the forecasted number. It may be a blip, but it’s a huge one and it will almost certainly take more than one much cooler report in January to comfort those that still fear inflation becoming entrenched.

That’s ultimately where we’re now up to in the inflation story. Many accept that base effects and lower energy prices will drive the headline inflation figure much lower next year, among other things, while a slower economy – maybe recession – will eventually hit demand and contribute to the decline. But what the Fed fears now is fighting entrenched inflation and these wage numbers won’t make for comfortable reading.

An economic victory for China amid gloomy PMIs

Chinese stocks were the clear outperformer overnight as authorities continued to work towards a softening of the country’s zero-Covid stance with the end goal seemingly being the end of it altogether. It’s thought that it will be downgraded to category B management as early as next month with officials claiming it’s less threatening than previous strains, a huge move away from the rhetoric and approach of the last few years.

This came as the Caixin services PMI slipped to 46.7, much lower than anticipated. That said, I’m not sure anyone will be shocked given the record Covid surge, but the more targeted – albeit seemingly confused – approach being taken has ensured less disruption, as evidenced by how much better the PMI has performed compared with earlier this year.

And it’s not just China that’s seeing surveys underperforming and, in many cases, putting in sub-50 readings. Europe is either already in recession or heading for it and the surveys highlight just how pessimistic firms are despite the winter getting off to a warmer start.

Japan is among the few recording a growth reading, although having slipped from 53.2 in October to 50.3 last month, you have to wonder for how long. Input prices are punishing firms, with some now raising prices in order to pass those higher costs on. That won’t help activity or convince the BoJ to declare victory, as higher energy and food costs are also hitting domestic demand. The one major outlier is India where the services PMI accelerated higher to 56.4 buoyed by domestic and external demand. An impressive feat in this global environment.

Oil higher as China looks to ease Covid restrictions

Oil prices are higher on Monday, rallying 2%, after the G7 imposed a $60 price cap on Russian oil and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.

From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective. The decision to leave output unchanged was probably the right one for now and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.

A major setback

It goes without saying that the jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.

But the yellow metal did recover those jobs report losses and even hit a new four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and simply doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold and a corrective move of some kind may be on the cards.

Silence is bliss

Bitcoin continues to enjoy a mild relief rally and has even moved above $17,000 to trade at its highest level in almost a month. It’s probably too early to celebrate yet though as these are very cautious gains that could be quickly and easily wiped out by more negative headlines related to FTX. Silence is currently bliss for the crypto community.

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