- Palm oil: Malaysia Hits 19.4m Tonnes
Malaysia’s palm oil output may rise by 12 percent this year to 19.4 million tonnes from 17.4 million tonnes in 2016, an industry group forecast media report on Tuesday.
“Crude Palm Oil production we anticipate will improve, an increase of about 12 per cent, I think it’s a good increment, so as not to affect the price,” Ahmad Kushairi, the Director-General for Malaysian-Palm Oil Board (MPOB) said at a conference in Kuala Lumpur.
He added that palm oil exports for the year would rise 11.2 per cent to 17.85 million tonnes from 16.05 million tonnes in 2016.
Crude palm oil prices will be firm in 2017, he said.
Recall that in 2016 at the Climate conference in Morocco, Ghana and six other African countries agreed to protect their tropical forests and shift focus to palm oil production.
Other countries in the agreement are Liberia, Congo republic, Sierra Leone, Ivory coast, Central African Republic and the DRC.
The countries with a combined 250 million hectares of tropical forests for palm oil producers, signed a joint declaration at the Morocco conference on climate change on Wednesday.
The Morocco deal already had the support of some of world’s largest palm oil producers, buyers and traders.
Palm oil fuels a $50 billion global industry of food and food products and is projected to reach $88 billion by the year 2022.
Africa is said to be the world’s next growth spot for palm oil production, with Nigeria seeing earnings growth of local producers, as foreign exchange ban on oil palm products spur domestic capacity.
Official figures in Nigeria’s oil palm sector show an estimated supply gap of about 1.7 million metric tonnes yearly.
Although this is posing a precarious situation, but new initiatives had been taken to close the gap.
Already key players have begun to unveil their backward integration plans while some are undergoing expansion phases to make bride the demand-supply gap for the commodity in the country.
For instance, PZ Wilmar Limited, has staked about $80 million on its crude palm oil refinery in Nigeria.
According to the company, the plan, which is being implemented, would save the country some foreign exchange by eliminating yearly imports of $300 million spent on Palm oil importation, while bringing back the nation’s glory as a primary exporter of oil palm.
Nigeria’s President, Muhammadu Buhari, was among other world leaders at the conference which held from November 14 to 16, 2016.
President Buhari addressed the Climate conference and unveiled plans to issue green bonds to raise climate funds.
The country also planned to reduce emissions by 20 per cent by the year 2030, with the intention of raising the target to 45 per cent, with the support of the international community.
The Drop in US Crude Oil Inventories Boosted Oil Prices on Wednesday
Crude oil prices rose on Wednesday following a decline in US crude inventories last week.
The American Petroleum Institute (API) had reported that United States crude oil inventories declined by 5.3 million barrels in the week ended January 22, 2021, more than a reduction of 430,000 barrels predicted by a Reuters poll.
The unexpected decline, coupled with slowing new COVID-19 cases in China, the world’s largest importer of crude oil, boosted oil prices on Wednesday.
Brent crude, against which Nigerian crude oil is measured, rose by 41 cents or 0.7 percent to $56.32 per barrel.
The U.S. West Texas Intermediate (WTI) crude oil also gained 56 cents or 1 percent to $53.17 a barrel.
“WTI is slightly firmer on the back of a larger-than-expected draw in US crude inventories reported by the API, which is offset by builds in gasoline and distillates,” said Vandana Hari, oil market analyst at Vanda Insights.
The data, however, showed petrol inventories grew by 3.1 million barrels in the week, more than experts projected.
Similarly, API data revealed that distillate fuel inventories that include diesel and heating oil, jumped by 1.4 million barrels, far higher than the 361,000 barrels decline predicted. However, refinery runs declined by 76,000 barrels per day.
“Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines,” ING economics said in a note.
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.
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