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Fuel import: FG saves N173bn in Five Months

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  • Fuel import: FG saves N173bn in Five Months

The Federal Government says it has been saving a total of $4m (N1.22bn) daily in fuel import bill since May 12, this year when it stopped paying subsidy claims to importers.

The Minister of Budget and National Planning, Senator Udo Udoma, who confirmed the figure, said the liberalisation policy in the oil sector had also led to a 30 per cent reduction in fuel consumption in the country.

He said these in a presentation made to economists at the annual conference of the Nigerian Economic Society.

Between May 12 and October 2, there are 142 days. And when the figure is multiplied by the daily savings of N1.22bn, it amounts to N173.24bn.

In the presentation, a copy of which was obtained by our correspondent in Abuja on Sunday, the minister said the partial deregulation of the downstream sector had enabled the Federal Government to ascertain the real demand for petrol in the country.

He noted that what the country had before May 12 was an artificial demand for petrol created by abuses of the subsidy regime.

He said, “We have introduced a market-related exchange rate regime and liberalised the downstream petroleum sector by freeing up the price of the PMS (petrol).

“The liberalisation of the PMS helped us to ascertain the real demand for the PMS in the country, as opposed to the artificial demand created by abuses of the subsidy regime.

“The PMS was liberalised on the 12th of May. Immediately this was announced, consumption dropped by 30 per cent. This reduction has resulted in a saving of $4m a day in the PMS import bill.”

The minister lamented that if there had not been disruptions in crude oil production, the economy would have recovered faster than it was currently doing.

Udoma stated, “Indeed, but for the major crude oil production disruptions we have been experiencing this year, we might have already started seeing the economy beginning to pick up a little as our reflationary capital spending would have started to kick in.

“Instead, we are in a recession with insufficient revenue to fully fund the 2016 capital budget.”

He explained that the Federal Government was currently taking measures to raise revenue by addressing the disruptions in the Niger Delta so as to restore oil production.

In a related development, the minister has appealed to international agencies to assist Nigeria’s drive for self-sufficiency by encouraging the local production of items required for the execution of their mandate in the country.

A statement from the ministry quoted him as saying this during a meeting with the Executive Director of the United Nations Population Fund, Prof. Babatunde Osotimehin, and members of a delegation from the agency.

He said Nigeria had the human capacity to realise the objective but needed support and patronage to drive the process.

As part of plans to achieve self-sufficiency, the minister said the government was focused on encouraging small and medium-scale industries and promoting made-in-Nigeria goods.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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