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OPEC: Nigeria Yet to Decide on Oil Production Cut

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  • OPEC: Nigeria Yet to Decide on Oil Production Cut

Nigeria and Russia have said it is too early to signal whether they would join any production curbs.

The Energy Minister, Saudi Arabia, Khalid al-Falih said on Wednesday that the country would not cut oil output on its own to stabilise the market, according to Reuters.

The Organisation of Petroleum Exporting Countries and its allies, led by Russia, will meet in Vienna next week against the backdrop of concerns over a slowing global economy and rising oil supplies from the United States, which is not involved in an existing agreement to restrain output.

The negative economic outlook helped to push oil below $60 a barrel this week from as high as $85 in October, prompting Saudi Arabia, the de facto leader of OPEC, to suggest significant production cuts.

Riyadh, however, has come under renewed pressure from US President Donald Trump, who asked the kingdom to refrain from output reductions and help to lower oil prices further.

Possibly complicating any decision on oil output is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul last month.

Trump has backed the Saudi Crown Prince, Mohammed bin Salman, despite calls from many US politicians to impose stiff sanctions on Riyadh.

Falih was in Abuja to meet Nigeria’s Minister of State for Petroleum Resources, Dr Ibe Kachikwu. The Saudi minister said signals from fellow OPEC members Iraq, Nigeria and Libya were positive ahead of the group’s December 6 talks because all ministers want to restore oil market stability.

“We are going to … do whatever is necessary, but only if we act together as a group of 25,” Falih told reporters, referring to OPEC and its allies. “As Saudi Arabia we cannot do it alone; we will not do it alone.

“Everybody is longing (to) reach a decision that brings stability back to the market … I think people know that leaving the market to its own devices with no clarity and no collective decision to balance the market is not helping.”

Brent oil edged down towards $60 on Wednesday, erasing early gains of more than one per cent, with the market unconvinced on the propect of OPEC cuts next week.

The Russian President, Vladimir Putin, will meet Mohammed in Argentina at this weekend’s G20 summit, which Trump will also attend.

Moscow has so far resisted joining any new production cuts and Falih did not say whether he had heard of any change in Russia’s position.

Speaking in Moscow, Putin said Russia was in touch with OPEC but Moscow would be satisfied with oil at $60 a barrel. Putin previously said Russia would be satisfied with a price of $70.

“We are in contact with OPEC and we are ready to continue our joint efforts if needed,” Putin said.

Russian energy minister Alexander Novak met Russian oil producers this week to discuss cooperation with OPEC, two industry sources said without providing details.

Kachikwu told reporters it was too early to say whether Nigeria would participate in any cuts but added that there was “absolute resolve” within the organisation to stabilise the market.

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.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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