- Oil Climbs Above $52 as Saudis, Russia Favour Output Cut Extension
Oil jumped to a three-week high on Monday following comments from both the Saudi Arabia and Russia to extend production cut until the first quarter of 2018.
The commodity which plunged to a 5-month low two weeks ago rose above $52 a barrel on Monday after energy ministers from the two top OPEC exporting nations said supply cuts should be extended for at least 9 months. Which is more than the 6 months stipulated in the accord signed in November 2016.
Brent crude gained 3.1 percent to trade at $52.46 to a barrel as at 1:56 pm Nigerian time, while West Texas Intermediate (WTI) rose 3.2 percent to $49.48.
However, experts have cautioned that relentless pressure from U.S. producers is likely to contain the new surge in prices.
“Every time oil tests that level…you see clients trading around it,” said James Butterfill, Head of Research and Investment Strategy at ETF Securities. “Every time it goes below that $50 a barrel level, it’s a buying opportunity and roughly when it hits about $50, we see a lot of selling at that point.”
Accordingly, the director of oil and gas at Cantor Fitzgerald Europe, Sam Wahab agreed that the growing U.S. production remains OPEC key issue.
“A further nine U.S. oil rigs were added last week, bringing the total count up to 712 – the most since April 2015. It is very likely this trend will continue at current oil prices,” Wahab added.
While oil has gained support from supply deal, inventories remain high globally. Keeping prices below $60 a barrel as first projected by the Saudi Arabia.
“Surge in production from both the Libya and Nigeria will likely necessitate equal cut from Russia and Saudi Arabia as both nations were exempted from production cut,” said Samed Olukoya, a foreign exchange research analyst at Investors King Ltd. “Therefore, for the proposed extension to be effective or taken serious by the market, other members must support the two giants, while OPEC state clearly its exit strategy rather than hoping demand will grow over time.”
OPEC and non-OPEC nations are to meet on May 25 in Vienna to decide policy. Egypt and Turkmenistan are invited to attend.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
Business2 months ago
Npower News on Permanency for Batch A, B
Forex2 months ago
Naira Improves Against Global Counterparts on Black Market
Business1 month ago
Buhari Budgets N420 Billion for Npower, Other Social Investment Programmes in 2021 Budget
Forex3 months ago
Zenith Bank Joins Other Banks to Cap International Spend Limit at $100/Month
Cryptocurrency2 months ago
Bitcoin Gains 1.67 Percent to $11,050 Per Coin Amid Liquidity Issue
Business3 months ago
Again, UBA Reduces International Spending Limit on Naira Card as Forex Scarcity Persists
Business3 months ago
FG Approves Stipends for Exited N-Power Beneficiaries
Stock Market3 months ago
Zenith Bank Declares 30 Kobo Interim Dividend for H1 2020