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Development Bank Takes Off in January, Says Adeosun

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  • Development Bank Takes Off in January

Development Bank, planned to provide funding for existing and start up Small and Medium Enterprises (SMEs), will commence operation in January 2017 with a capital of $1.3 billion, the Minister of Finance, Mrs. Kemi Adeosun has disclosed.

Adeosun, who described the sector as a “very critical sector” stated that it accounts for 50 per cent of the nation’s Gross Domestic Product (GDP), adding that investing in the sector will catalyse more “activities in the economy.”

The minister stated this in Lagos yesterday in an interview during The Wealth Creation Platform, organised by the Kingsway Christian Centre (KICC) where she was a guest speaker. Besides the minister, others speakers at the event were Mrs. Folorunsho Alakija and founder of KICC, Pastor Mathew Ashimolowo.

She stated that government was focused on bridging the infrastructure gap, adding that the Federal Government is committed to road construction next year. She added that government has created a Road Trust Fund in which both government and private sector money would be committed to funding road construction across the country. She said government had received offers from foreign investors who were willing to invest in Nigerian roads.

“SMEs are 50 per cent of our GDP, it is obvious that if you invest in the SMEs that is where the growth in the economy can occur. Investing in the sector will unlock the potential in the economy.

“We are putting money into the Development Bank of Nigeria; that is a specialist bank that is focused on channeling low cost funds to SMEs. It is a project that was supposed to start two years ago but has been stalling. We’ve got it going and we’re hoping it will take off in early 2017. That bank has $1.3 billion in capital that will be pumped into SMEs through micro finance banks and a few commercial banks at low cost because we know that once the SMEs grow you’ll start to see a lot more activities,” she stated.

According to her, government plans to release the third tranche of capital vote before the end of the year to further demonstrate its commitment to road construction across the country.

“The infrastructure gap in Nigeria is $25 billion a year, every state of the federation has roads that are in really deplorable condition. What we are trying to do is to get government money into roads; secondly, we have created Road Trust Fund where we will put private money, particularly pension fund and invest it into roads.

“So what you should see in 2017 is massive focus on roads; not just government money. There will also be direct private money on rods that could be tolled. The gap is too wide, government alone can’t do it, we have to bring in private money and once you bring private money they have to get their money back. Even foreign money will be injected into the Road Trust Fund, we’ve got offers from foreign investors who want to come in and invest in our roads,” she explained.

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

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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