Oil erased its gains for the year in New York as Saudi Arabia’s deputy crown prince said the kingdom will only freeze production if Iran and others follow suit.
Futures capped a weekly decline of 6.8 percent, the first since mid February. With producers scheduled to meet in Doha this month to complete an accord on capping output, Saudi Arabia’s Mohammed bin Salman signaled in an interview with Bloomberg that if any country raises output, the kingdom will also boost sales. While Iran will attend the talks, it has ruled out limiting supply as it restores exports after sanctions were lifted in January.
“The Saudis are now saying that they will only freeze if everyone else lines up behind the idea,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “That makes the meeting useless since the Iranians are going to continue increasing output.”
Oil rose 14 percent in March as it rebounded from a 12-year low amid speculation the global glut will ease as U.S. output falls. Russia will join Oman and every member of the Organization of Petroleum Exporting Countries apart from Libya in Doha on April 17 to discuss freezing production. OPEC members, led by Iran and Iraq, boosted output in March, a Bloomberg survey showed.
West Texas Intermediate for May delivery fell $1.55, or 4 percent, to close at $36.79 a barrel on the New York Mercantile Exchange. It was the lowest settlement since March 15. Total volume traded was 10 percent below the 100-day average at 2:46 p.m. Prices rose 3.5 percent last quarter.
Brent for June settlement fell $1.66, or 4.1 percent, to $38.67 a barrel on the London-based ICE Futures Europe exchange. The May contract expired Thursday after gaining 34 cents to $39.60. The global benchmark crude closed at a 47-cent premium to WTI for June delivery.
“If all countries agree to freeze production, we’re ready,” Saudi Arabia’s bin Salman said. “If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”
“The Saudi comments about requiring all producers to take part in the freeze doom the Doha talks,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “The Doha process is falling apart before our eyes. The market has richly rewarded the rhetoric.”
OPEC boosted output by 64,000 barrels to 33.09 million a day in March, data compiled by Bloomberg show. Iranian production rose by 100,000 barrels a day to 3.2 million last month, the most since May 2012, according to a Bloomberg survey of oil companies, producers and analysts. Sanctions against the nation, which were strengthened in July 2012, were lifted in January.
Commodities rebounded earlier this week as the dollar declined after Federal Reserve Chair Janet Yellen said heightened risks to the global economy warranted a cautious approach to further rate increases. A weaker U.S. currency boosts demand for raw materials priced in dollars.
- Rigs targeting crude in the U.S. fell by 10 to 362 this week, the least since November 2009, Baker Hughes Inc. said on its website Friday.
- Colombia’s Ecopetrol SA can activate some fields if oil rises to $45 and above, Chief Executive Officer Juan Carlos Echeverry said in Bogota.
- Nigeria will nominate Mohammed Barkindo, former group managing director of state-owned Nigerian National Petroleum Corp., for the position of OPEC secretary-general, according to two people familiar with the matter.
China, which is poised to overtake the U.S. as world’s biggest crude oil importer, will see its domestic production slip this year from a record, the National Energy Administration said on Friday.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
News4 weeks ago
Heartbroken American Mistress Displays Dangote’s Buttocks in a Viral Video
Crude Oil4 weeks ago
Crude Oil Rose to Almost $52 Per Barrel After Trump Signs Stimulus Package
News4 weeks ago
FCMB Group MD Links to Death of Tunde Thomas, Husband of Married Staff He Fathered Her Kids
Investment2 weeks ago
London Real Estate Company for African Investors Announces its Launch
Finance4 weeks ago
President Buhari Increases Npower Budget by N365 Billion
Technology4 weeks ago
Chinese Government Goes After Jack Ma and Empire
News4 weeks ago
Tunde Thomas: FCMB Commences Review Into Allegations of Unethical Behavior Against MD Nuru
Brands4 weeks ago
Prada’s Profits Drop by $219 Million, Sales in China Up by 60%