- OPEC Projects to Tighter Oil Market in 2019
The research and analysis arm of the Organisation of Petroleum Exporting Countries pointed towards a much tighter market in 2019 as the group has seen its production fall significantly this year, led by curbs to Saudi Arabian output along with dramatic, involuntary declines from sanctions-hit Venezuela.
In its monthly oil market report, OPEC estimates demand for its crude to average 30.30 million barrels per day in 2019, a fall of 1.05 million bpd on the year, signifying that oil inventories are going to decline sharply, pointing to a very tight market.
But the group said that the market remained oversupplied and warned of slowing demand growth, according to S&P Global Platts.
Its 14 members pumped 30.02 million bpd in March, its lowest output figure since February 2015. This is 100,000 bpd lower than the call on its own crude. Demand for OPEC crude in 2018 averaged 31.35 million bpd.
The March figure is down from 30.56 million bpd in February, largely on a huge fall in production from Venezuela and Saudi Arabia.
Oil prices have recovered sharply since December, when they fell to a 15-month low, and ICE Brent has been trading a five-month high of above $71 per barrel this week.
OPEC revised demand growth down in 2019 to 1.21 million bpd due to “slower-than-expected economic activity.”
Global oil demand is estimated to average 99.91 million bpd this year, compared with 98.70 million bpd in 2018, OPEC said. The group pegged 2018 global oil demand growth at 1.41 million bpd.
OPEC also revised down non-OPEC oil supply growth in 2019 by 60,000 bpd “due to extended maintenance in Kazakhstan, Brazil and Canada.”
It said that US, Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan will be the main drivers of supply growth this year.
The group forecasts US crude production to rise by 1.46 million bpd in 2019 to 12.42 million bpd.
“The highest incremental production is expected in the Gulf Coast, albeit at a slower pace compared to a year ago due to the pipeline constraints in Permian Basin,” it added.
Venezuela reported a production figure of 960,000 bpd, down by a massive 472,000 bpd, as power outages and US sanctions cripple the South American oil producer.
Saudi Arabia’s crude output fell 289,000 bpd in March to average 9.79 million bpd, according to an average of the six secondary sources that OPEC uses to gauge production.
The kingdom also self-reported production of 9.79 million bpd, its lowest since January 2017 and a fall of 350,000 bpd month on month. That is much below its quota of 10.31 million bpd under the cut agreement.
The kingdom has decreased production by 1.30 million bpd since November when it pumped a record high of 11.09 million bpd.
At the last OPEC meeting in Vienna, the group’s members agreed to slash output by 812,000 bpd, with Russia and nine other non-OPEC allies committing to a cut of 383,000 bpd for the first six months of 2019.
Iraq’s production fell marginally to 4.52 million bpd in March, slightly above its quota of 4.51 million bpd, according to OPEC secondary sources.
In Iran, hit by US sanctions, output was slight down, falling 28,000 bpd to 2.70 million bpd in March.
Libya, which is also exempt from the deal, pumped 1.098 million bpd in March, up 196,000 bpd from the previous month, but output remains at risk as the country is on the brink of a possible civil war.
A key metric for the deal has been to lower oil inventories below the five-year average. OPEC said it had made some progress towards achieving this goal.
COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday
Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.
Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.
The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.
OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.
This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.
Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.
“The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.
“President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.
Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021
The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.
The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.
Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.
According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.
The administration aimed to implement at least 70 percent of the proposed budget if approved.
He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”
He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”
World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020
The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.
The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.
According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.
Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.
“Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.
He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’
“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”
Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.
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