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Oil Dips After Rising Above $50

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Crude oil
  • Oil Dips After Rising Above $50

Oil prices dipped yesterday in United States (U.S.) trading, as nagging worries about abundant global crude supplies dragged prices lower after an early rally pushed Brent above $50 per barrel for the first time since early June.

Traders predicted prices would hold near current levels ahead of Monday’s meeting between key Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers in St. Petersburg, Russia. The market has been watching reports that Saudi Arabia, the world’s largest crude producer, is considering an additional supply cut to bring markets into balance.

Nigeria’s budget of N7.44trillion was benchmarked at an oil price of $44.5 per barrel and production of 2.2million barrels per day.

The Financial Times reported two days ago that the Saudis were considering additional cuts, citing a consultant’s report. On Tuesday, Reuters reported the country was committed to working with other countries to draw down stocks, taking into account the surprising increase in production from OPEC members Nigeria and Libya.

The OPEC and non-OPEC allies, including Russia, agreed last year to cut production by 1.8 million bpd a day; that deal has been extended to March 2018.

Brent futures stood at $49.62 a barrel at 11:27 a.m. EDT, down 7 cents. U.S. West Texas Intermediate (WTI) crude futures were at $47.01 a barrel, 11 cents lower.

In early trade, both benchmarks rose to their highest since June 7, after rallying in the previous session on data showing U.S. crude and fuel inventories fell sharply last week.

U.S. crude inventories dropped by 4.7 million barrels in the week to July 14, according to the Energy Information Administration, more than forecast.

Gasoline stocks fell by 4.7 million barrels, exceeding expectations, while distillate stocks also fell.

“I’m skeptical, after seeing many years of drawdowns in summer driving season,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “We’re waiting to see if this is really what’s going on or the normal seasonal drop-off.”

U.S. oil stocks, at roughly 490 million barrels, remain well above the five-year average, while U.S. production has increased almost 12 per cent since mid-2016 to 9.4 million barrels per day (bpd).

Oil futures also fell in tandem with other risk markets in the mid-morning after Bloomberg reported that Robert Mueller, special counsel appointed to investigate allegations of Russian interference in the 2016 election and possible ties with U.S. President Donald Trump’s administration, was also looking into Trump’s business transactions. Stock markets and the dollar dropped on that news before recovering somewhat.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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