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Crude Oil Rises to Three Months High Ahead of Cuts Extension

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  • Crude Oil Rises to Three Months High Ahead of Cuts Extension

Oil prices hit a three month high on Tuesday during the Asian trading session as investors and traders remain optimistic about production cuts extension.

OPEC and allies, together known as OPEC plus, are expected to meet this week to discuss the extension of 9.7 million barrels per day cuts agreed in April (for May and June) to further balance the global oil market and artificially support prices.

Brent crude oil, against which Nigerian oil is priced, rose to $39.53 per barrel on Tuesday at around 10:30 am, up from $15.93 per barrel it traded in April during the peak of COVID-19 pandemic.

UKOilWeeklyWhile the US West Texas Intermediate oil increased from -$37 to $36.31 per barrel.

“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.

According to a Reuters report, the current agreement of 9.7 million barrels per day cuts was for May and this month. However, unverified comments pointed to a likely scale back to about 7.7 million barrels per day from July to around December of 2020.

The source said Saudia Arabia, the group’s largest producer, has been leading the talks for the extension.

Still, experts believe Moscow could once again be a stumbling block and push back given the severity of COVID-19 on the nation’s economy.

Russia had previously pulled out of the whole agreement to focus on revenue generation and support its falling economy before President Donald Trump intervened at the peak of the global pandemic.

“Russia will be the key obstacle in any extension, and they are unlikely to agree on any extension which goes beyond a couple of months,” said analysts at Dutch bank ING.

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.

Economy

Prepaid Meter is Free, Buhari Warns DisCos, Agents

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President Muhammadu Buhari once again warned Power Distributing Companies (DisCos) and their agents selling prepaid meters to electricity customers against the Federal Government directive that meter is free.

Ahmed Rufai Zakar, the Special Adviser to the President on Infrastructure, who represented Buhari at the FGN/NLC-TUC ad-hoc committee on electricity tariff stakeholders held in Ibadan, Oyo State on Wednesday, said President Buhari understood people’s concerns on issues surrounding electricity and was determined to curb and deal with unscrupulous individuals in the power sector.

He said, “We have made it very clear through the regulators direct order as well as intervention from the Ministry of Power that the meters are to be provided to Nigerians at no cost.

“Even for meters that were paid for, there is the directive from the regulator to the discos that they would need to find a way to reimburse those citizens over time.

“In cases where we find any disco or disco representative selling the meters or exploiting Nigerians to be able to get meters by paying, we would take the full measures of the law.

“The President has mandated that these meters must be free. We have also said that they must come from local manufacturers.

“This would create jobs and revive our industry.”

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Economy

Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS

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Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).

Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.

“Quarter-on-quarter, the sector growth rate was 18.92 per cent.

“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.

“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.

“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”

Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.

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Economy

Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey

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The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.

The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.

He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”

Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.

“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.

“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”

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