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Petrol Scarcity Looms as Product Sells for N142 per Litre in Depots

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  • Petrol Scarcity Looms as Product Sells for N142 per Litre in Depots

Despite the pledge by oil marketers to support the federal government’s efforts in ensuring sustained and stable supply of petrol at the official pump price of N145 per litre, there are indications of imminent scarcity as some depot owners have jerked the ex-depot price to N142 per litre, against government’s approved N123.28 –N133.28 per litre ex-depot price band.

Rising from a two-day consultative forum of the downstream petroleum sector, which was recently convened by the Chief of Staff to the President, Mallam Abba Kyari, the marketers had restated their commitment to the N145 pump price and also pledged to ensure significant reduction in the price of diesel.

On May 11, 2016 when the current retail price band of N135 – N145 per litre took effect, the Petroleum Products Pricing Regulatory Agency (PPPRA) had fixed the indicative ex-depot price at N123.28 –N133.28 per litre for product that is in the depots, via circular No. A.4/9/017/C.2/IV/690.

However, for petrol that is still in the mother vessel at the high sea, the ex-depot price was fixed at N116.63 –N126.63 per litre as the marketer will incur additional expenses to hire daughter vessels to lift the product to the depots.

But investigation revealed that only six members of the Major Oil Marketers Association of Nigeria (MOMAN) – Forte Oil, Total, Mobil, Conoil, MRS and Oando- are loading petrol at government’s approved ex-depot price.

It was, however, gathered that the MOMAN members do not sell the product to other marketers but only to their own dealers and retail outlets.

According to investigation, majority of the independent marketers and depot owners sell above the official ex-depot price range, thus making it impossible for the retail outlets to sell at N145 per litre and break even.

Investigation further revealed that the ex-depot price in most of the depots ranges between N136, 139, 140 and N142 per litre.

It was further learnt that virtually all the product in the private depots is sourced from the Nigerian National Petroleum Corporation (NNPC) as Total Nigeria Plc is the only private marketer known to have imported petrol in the past two weeks, according to marketers who spoke to on the issue.

The NIPCO Plc, which also sells product to all marketers at government’s approved price, does not have petrol in its depot.

The company at the weekend, there was a notice to marketers by the company that it could not guarantee when product would be available.

Some of the marketers, who spoke on condition of anonymity, said the N145 per litre pump price was no longer sustainable as a result of the hike in ex-depot price.

“By the time you pay the union fees, which amount to over 50 kobo per litre; you pay the driver, cost of diesel for fuel, plus the extortion by security agents, you will end up at a huge loss,” said one of the marketers.

Following the hike in ex-depot price, the South West Zone of the Independent Petroleum Marketers Association of Nigeria (IPMAN) at the weekend threatened to stop lifting petrol from the depots.

The meeting of the downstream players convened at the instance of the Presidency, reviewed the state of the downstream sector and addressed issues that may impede the uninterrupted supplies of petroleum product leading to price distortions.

In attendance at the forum were Kyari; Minister of Finance, Mrs. Kemi Adeosun; Minister of State (Aviation), Senator Hadi Sirika; the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele; Group Managing Director of NNPC, Dr. Maikanti Baru; Director-General, State Security Service (SSS), Mr. Lawal Daura; as well as the chief executive officers of major marketers, depot owners and independent marketers.

“Discussions focused on designing proactive measures that will balance supplies and maintain the fixed pump price of N145 per litre for petrol.

Furthermore, deliberations also extended to creating an affordable and stable price regime for deregulated products such as diesel and aviation fuel, which in recent times have been volatile,” MOMAN said in a statement at the end of the meeting.

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.

Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

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.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

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.

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Crude Oil

Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

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Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.

Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.

While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.

On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”

“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.

Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.

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Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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