Business

Oil Prices Tumble on OPEC Skepticism

Published

8 years ago

September 24, 2016

Oil Pumping Jacks Operating At MND AS Depot As $30 Barrel Gets Closer

Oil futures fell sharply Friday, posting their biggest daily loss in two months on skepticism that the world’s largest exporters can cooperate and ease a supply glut that has dragged down prices for two years.

Crude dropped just before noon after Bloomberg News reported Saudi Arabia doesn’t expect the Organization of the Petroleum Exporting Countries to reach an agreement when it meets Wednesday in Algeria’s capital. The comments echo those made last weekend by the group’s secretary-general to Algeria’s state news agency APS that the meeting is informal and not for decision-making.

Traders “are reacting with disappointment and disgust,” said Donald Morton, senior vice president at Herbert J. Sims Co., who runs an energy-trading desk.

Light, sweet crude for November delivery settled down $1.84, or 4%, to $44.48 a barrel on the New York Mercantile Exchange. It was the largest daily loss since July 13 and erased most of the gains from a four-session winning streak. Nymex crude ended the week up 86 cents, or 2%.

Brent, the global benchmark, lost $1.76, or 3.7%, to $45.89 a barrel. It ended the week up 12 cents, or 0.3%.

Saudi Arabian and Iranian oil officials have clashed this week over production limits while meeting at the OPEC headquarters in Vienna, The Wall Street Journal reported Friday. Saudi Arabia and Iran couldn’t agree on what statistics should be used to determine oil output levels for a potential “freeze”—the term used to describe a joint effort by big producers to limit their petroleum output at the current pace or lower.

Short bursts of optimism have often been broken by news of internal disputes and by widespread skepticism from analysts and traders about OPEC’s ability to strike a deal. Heavyweights including Saudi Arabia, Iran and Iraq have longstanding political rivalries and have been in a fierce competition to undercut each other and sell more oil.

Analysts at Macquarie Group issued a note Friday advising traders to sell on almost any outcome from OPEC’s talks. A concrete deal with detailed parameters on output limits from all parties is the least likely outcome, and even if they do reach a deal, it is likely to be littered with exceptions and waivers, and at best lead to a short-lived rally, the bank’s analysts said.

“Even an agreement to freeze would not be bullish either, given how high current production levels are. The only bullish case would be a credible and significant supply cut, which as it stands right now is extremely unlikely,” said Tamas Varga, an analyst at PVM Oil Associates.

At 11 million barrels a day, Russian production levels are at their highest since the collapse of the Soviet Union, according to Commerzbank commodities researchers. “The supply of crude oil remains ample, in other words,” the bank’s analysts added in a note Thursday.

Prices have often been bolstered by rhetoric from major OPEC producers since late August when they broached the idea of informal talks and better cooperation. Saudi Arabia and Russia this month signed an oil-cooperation agreement. OPEC oil chief Mohammed Barkindo last weekend said that if agreed by all parties, an emergency meeting could be called later this year to solidify a policy. Venezuelan President Nicolás Maduro also has said OPEC and non-OPEC members were close to a deal.

“There’s a chance of success,” said Robert Minter, investment strategist at Aberdeen Asset Management, which had $402.8 billion in assets under management at the end of June. “It would at least show that they can once again act together and achieve a consensus.”

A senior OPEC official was quoted by the Journal as saying that OPEC has to keep the chatter going, “to make sure prices don’t fall to a certain level or rise to a certain level they don’t like, and recently we have seen a lot of that.”

Gasoline futures settled down 2.49 cents, or 1.8%, at $1.3769 a gallon. They lost 5.8% for the week, the worst performance since the week ended Sept. 2.

Diesel futures lost 4.69 cents, or 3.2%, to $1.4073 a gallon. That canceled out nearly all the gains from the week, which diesel finished up just 0.2%.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Business

Glo-Djigbé Industrial Zone (GDIZ) is Exporting its first ‘Made in Benin’ garments for the American brand U.S. Polo Assn.

Published

6 hours ago

September 12, 2024

Samed Olukoya

Glo-Djigbé Industrial Zone (GDIZ) is proud to announce the first export of ‘Made in Benin’ ready-to-wear clothing for the prestigious American brand, U.S. POLO ASSN..

A world-renowned brand, U.S. POLO ASSN. offers a wide range of clothing, accessories, travel goods, watches and shoes, available in over 130 countries.

This first shipment represents a significant step forward in the integration of GDIZ into the global supply chains of the ready-to-wear sector. The collaboration, which is expected to generate volumes of more than one million pieces over the next few years, is being carried out in partnership with INCOM S.P.A., which holds the licence for U.S. Polo Assn. on the European market. All garments shipped from GDIZ are destined for the European market via INCOM S.P.A.

Aimed at the Italian market, this first shipment includes a range of high-quality garments designed to U.S. POLO’s exacting standards, including:

Hooded sweatshirts ;
Polos;
T-shirts.

This partnership with U.S. POLO ASSN. follows several other shipments already made for international brands such as the American brand The Children’s Place (TCP) and the French brand KIABI. The confidence shown by these international brands has strengthened GDIZ’s position as a key player in textile production in Africa.

Mr Létondji Beheton, Managing Director of the Société d’Investissement et de Promotion de l’Industrie (SIPI-Benin), expressed his enthusiasm at this important milestone: ‘This first export of “Made in Benin” clothing for U.S. Polo Assn. is not only a source of pride for GDIZ, but also for Benin as a whole. It is a testament to our growing capacity to produce high-quality textiles that meet international standards. We are delighted to see Benin take a significant step forward in the global ready-to-wear industry, highlighting our commitment to excellence and sustainable development’.

Francesco Gozzini, Production Director of INCOM Italy, underlined the importance of this partnership: ‘We are honoured to be working with Glo-Djigbé Industrial Zone (GDIZ) on this significant export of garments for the U.S. Polo Assn brand. This partnership is a testament to the quality and dedication present in Benin’s textile industry, which fits perfectly with our commitment to offer excellence in every product we offer to the European market. The craftsmanship and attention to detail in these garments reflect the high standards we maintain at INCOM. We look forward to continuing this fruitful collaboration and expanding our offering with ‘Made in Benin’ garments’.

Merger and Acquisition

FBN Holdings Clarifies Merchant Banking Divestment, Retains Other Subsidiaries

Published

1 day ago

September 11, 2024

Samed Olukoya

FBN Holdings has sought to clarify the recent divestment from its Merchant Banking business.

According to the lender, all its businesses and entities apart from the Merchant Banking business are not included in the divestment deal.

It said, “We wish to clarify that all other entities and businesses listed below are not included in the divestment, and they remain subsidiaries of FBNH and are well integrated into the Group’s strategic focus.”

The subsidiaries are FBNQuest Capital Limited, FBNQuest Asset Management Limited, FBNQuest Trustees Limited, FBNQuest Funds Limited, and FBNQuest Securities Limited.

“We reiterate that the divestment pertains solely to FBNQuest Merchant Bank Limited, with no impact on the continued operations or strategic positioning of our other subsidiaries within the Group,” the bank stated in a release signed by Adewale L.O. Arogundade, Acting Company Secretary.

Business

Border Trade Plummets 80% as Naira Devaluation Hits Hard

Published

2 days ago

September 10, 2024

Samed Olukoya

Business activities at Nigerian borders have dropped by 80 percent due to the depreciating Nigerian currency.

Licensed customs agents at the borders said the plunge in the Naira’s exchange rate to the CFA franc is the reason for the declining business activities at the nation’s borders.

In the last three years, the Nigerian Naira has dropped from N300 for 1,000 CFA francs to N2,660 for 1,000 CFA francs.

According to Ogonnanya Godson, Vice Chairman of the National Association of Government Approved Freight Forwarders, Seme Chapter, business activities at the border began declining in 2021.

“The Cotonou CFA franc is now N2,660 for 1,000 CFA francs. It started increasing from N300 for 1,000 CFA francs three years ago until it reached its current level, which is affecting our businesses. The rate at which the exchange rate has been increasing since 2023 is alarming,” Godson stated.

He further noted that some importers have begun boycotting the borders, especially Seme, due to the exchange rate.

“Importers no longer patronize these areas because, after clearing and paying for everything, they end up losing. So activities have dropped by between 70 to 80 percent, and the exchange rate of the dollar is also affecting this area.

“The volume of activities here is now between 22 to 30 percent. This applies to other borders as well because of the exchange rate,” he stated.

Lasisi Fanu, a former Seme Chapter Chairman of the Association of Nigerian Licensed Customs Agents, corroborated Godson’s statements and admitted that activities at the border have declined.

“That is the simple truth and fact about the situation. You can’t get anything less than what you’ve been told about the drop in activities at the borders. Every day, the CFA franc appreciates while the Naira depreciates.

“Today, I was informed that the CFA franc has increased to between N2,650 and N2,700 for 1,000 CFA francs. This began three years ago and has worsened since 2023,” Fanu stated.

Fanu explained that the Naira’s depreciation against the CFA franc is similar to its depreciation against the US Dollar.

“Whatever 1,000 CFA francs could buy in the Republic of Benin two years ago, it still buys the same amount now. It’s the Naira that is depreciating.

“That’s the reason there is no business. The people who used to go to Cotonou for business said there is no more business because their customers there have said they can no longer trade due to the high exchange rate against the Naira,” he explained.