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Oil Rises to $55 as Hurricanes Damage Refineries

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  • Oil Rises to $55 as Hurricanes Damage Refineries

Oil-markets on Friday saw Brent crude supported by Saudi Arabia hoping to cut October supplies, while United States crude was curbed by refinery-outages due to Hurricane-Harvey damages, which dented demand.

Focus was shifting to three other hurricanes that are currently tearing through the Caribbean and Gulf of Mexico.

Brent crude futures rose to 54.57 dollars a barrel at 0735 GMT, with the benchmark for international oil prices earlier marking its highest since April at 54.79 dollars a barrel.

Saudi Arabia will cut crude oil allocations to its customers worldwide in October by 350,000 barrels per day, an industry source familiar with Saudi oil policy told Media on Thursday.

The United States West Texas Intermediate crude futures were at 48.98 dollars a barrel, 11 cents below their last settlement.

Traders said that the dip was a result of low refining activity following Hurricane Harvey, which hit the U.S. Gulf coast two weeks ago.

It knocked out almost a quarter of the country’s huge refinery industry, cutting demand for crude oil refining lifeblood.

“Most refineries are restarting and we expect a near-full recovery by month-end,” U.S. investment banker, Jefferies said.

Harvey’s impact was also felt in oil production. U.S. oil output fell by almost 8 percent, from 9.5 million barrels per day to 8.8 million bpd, according to the Energy Information Administration.

Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have also impacted shipping.

“Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s,” ANZ bank said.

Traders said it would take weeks for the U.S. petroleum industry to return to full capacity, and that under the current conditions it was difficult to identify fundamental market trends.

As the oil industry continues to grapple with the fallout from Harvey, a much bigger Hurricane was lashing the Caribbean islands and heading for the United States.

Hurricane Irma, which has become one of the biggest storms ever measured, on Friday hit the Dominican Republic and Haiti, heading for Cuba and the Bahamas.

It was predicted to hit Florida by Saturday.

The U.S. National Hurricane Center (NHC) said that Irma was still a Category 5 hurricane, with wind speeds of 160-185 miles per hour (260-295 km/h).

On Irma’s heels, Hurricane Jose is heading for the Caribbean Leeward islands, which have just been devastated by Irma, with wind speeds of 120 mph (195 km/h).

With storm Katia about to hit the Mexican Gulf coast, there are three major hurricanes currently active in the region.

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.

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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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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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