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Inflation Risks Will Increasingly Rattle Markets: deVere CEO

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Investors must avoid complacency and buckle up as inflation-triggered volatility is set to shake markets until the end of 2021, warns the CEO of deVere Group.

The warning from Nigel Green, chief executive and founder of deVere, one of the world’s largest financial advisory, asset management and fintech organisations, comes as Chinese stocks plummeted to almost their lowest level in a year, with price surges cooling hopes for measures to help economic growth.

It also comes ahead of the latest U.S. inflation data on Wednesday. The consumer price index (CPI) is expected to show a 0.6% jump compared to the previous month, or a year-over-year gain of almost 6%, which would be the biggest in 30 years.

Mr Green notes: “Ongoing and heightening inflation fears in the world’s two largest economies – and elsewhere in other major economies – are going to spook global financial markets as we move towards the end of the year.

“Whilst markets might not be balking right now, as they currently have a sort of tunnel vision, with central banks and governments around the world pulling back their unprecedented support programs due to price surges amongst other factors, the easy money tap is steadily going to dry up.”

He continues: “Investors need to avoid complacency. As central banks are increasingly flagging, inflation has become a concern and growth is to become slower due to supply side bottlenecks – and, therefore, interest rate hikes are coming.

“This will all trigger increasing market volatility moving forward as the world readjusts again.”

Last week as several major central banks gave their latest forecasts, the deVere CEO said, “This is the hardest time to be an investor and worst time not to be.  There are real opportunities to be had, but navigating the territory is set to become more complex in coming months as we move towards a new era of interest rate normality driven partly by inflation fears.”

Investors, he observes, should remain in the market, but they should review their portfolios to ensure that they are properly diversified across asset class, sectors, regions and currencies.  This will ensure they are best positioned to mitigate the downsides and seize opportunities arising from the likely volatility.

He concludes: “From China to the U.S., the UK to Europe, inflation risks are building, and this will increasingly rattle the markets.”

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

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Crude Oil

NNPC Limited Discovered 395 Illegal Refineries

The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

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The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

At the Senate briefing in Abuja on Tuesday, the Chairman of NNPCL discloses that the company has discovered and shut down 395 illegal oil refineries. He also noted that 273 wood boats were taken down while 374 illegal oil reservoirs were destroyed. 

Mele Kyari noted that serious actions are being undertaken to curtail oil theft in the Niger Delta region.

“We have deactivated 395 illegal refineries; we have taken down 273 wooden boats, we have destroyed 374 illegal reservoirs, we destroyed 1,561 metal tanks.” Mele Kyari said.

He added, “We have seized over 49 trucks and burnt them down; we have discovered illegal oil pits of 898 so far, and, 219 cooking sites have been taken down.”

Addressing the senate committee, Mele Kyari noted a criminal enterprise of such magnitude can cripple the oil revenue. 

The NNPC chairman also disclosed that they had caught wind of an illegal connection of four kilometres route into the sea running from its major Forcados line, which he estimates has been around for 9 years.

Investors King had earlier reported in September that for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

According to the Managing Director and Country Chair for Shell, Mr Osagie Okunbor, oil theft was one of the reasons why Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, the head of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe said in a statement that about 141 million barrels of oil were produced in the first quarter of 2022, but only about 132 million barrels of oil were received at export terminals. 

Meanwhile, Kyari has proposed capital punishment for oil thieves and pipeline vandals. He noted that oil thieves are the country’s enemy and they should be treated as such. 

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Energy

Natural Gas Analyst Predicts Slim Chance of Ending Gas Flaring by December 2022

Costs, policy, and operating environment among others need to be reviewed if the Federal Government must end gas flaring by December 2022.

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Costs, policy, and operating environment among others need to be reviewed if the Federal Government must end gas flaring by December 2022, natural gas analyst, Kayode Oluwadare, has said.

According to Oluwadare, the federal government must address the cost differential between local and foreign retail prices, review its gas policy and ensure an enabling business environment for intending gas investors.

Breaking down some of the challenges, he said a metric million British thermal unit is sold for $55 in international markets while the same unit goes for as low as $3.77 in Nigeria. This, he said would continue to discourage potential investors from committing their funds to the initiative.

He said “A lot of gas producers would rather sell their gas to the international markets, rather than keep it for the domestic market. Even before the global energy crisis, it has always made more business sense for producers to sell gas to international markets (an estimated $55 per metric million British thermal units) and earn in US Dollars, as opposed to local/domestic markets which are priced in Naira (an estimated $3.77 per metric million British thermal units).”

He blamed this on the Nigerian Gas Master Plan (NGMP) that mandated gas companies to give waivers/subsidies to power generation plants.

“Another factor to consider is also the Nigerian Gas Master Plan (NGMP), which gives waivers/subsidies to power generation plants to get gas at the lowest possible price under the national gas pricing policy”, he claimed.

Kayode stated that major factors like Business environment, policies, cost, and market factors will have to be addressed for the Buhari administration to end gas flaring this year-end.

He said “If I am an investor and I want to trap gas from a production site, what are the terms for selling to the power plants to make profits? We already know how some power generation plants are unable to meet up with their financial obligations for gas supplies.”

On the issue of cost, he said some crude oil producers prefer to flare gas than process it because of the huge investment involved in trapping and processing it.

He said “There is also an issue of cost on the part of crude oil producers who would rather flare the gas than trap and process it, and the investors who will build gas processing plants, will they think it’s a worthwhile investment due to the fiscal regime that does not protect the gas producers?”

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Crude Oil

Crude Oil: Nigerian Government Set to Reopen 180,000bpd Trans Niger Pipeline

The Federal Government is set to re-open the Trans Niger Pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

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Six months after the Trans Niger Pipeline (TNP) was shut down due to vandalism and oil theft, the Federal Government is set to re-open the pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

Investors King learnt that Trans Niger Pipeline (TNP) serves as part of Nigeria’s gas liquids evacuation infrastructure, which is vital for domestic power generation and the export of liquefied gas.

According to a statement released by the General Manager of National Petroleum Investment Management Services (NAPIMS), Mr Bala Bunti on his official Twitter handle, the Trans Niger Pipeline will enhance Nigeria’s oil production capacity. 

The General Manager noted that NAPIMS has been in talks with the host communities along the pipeline to bolster security for the crucial oil infrastructure. 

“The NAPIMS leadership delegation under the  General Manager of Joint Venture operations, Engr Zakariya Budawara, had spent the last one week with the Bodo community in Gokana LGA of Rivers State where the pipeline is situated and runs through”. He said. 

Bunti further stated that the people of Bodo have pledged their commitment to ensure the security of the oil infrastructure in exchange for improved quality of life, job creation and capacity building. 

It will be recalled that the Trans Niger Pipeline was shut down by Shell Petroleum Development Company because of vandalization and oil theft. It has been moribund ever since because no crude has flown through it.

Investors King had earlier reported that Nigeria’s oil production has been characterised by theft, vandalism and sabotage which has led to a massive drop in production. 

Some major oil companies had announced a cease of operation because of vandalism and insecurity. 

In July 2022, the Managing Director and Country Chair for Shell Petroleum Development Company of Nigeria Limited, Osagie Okunbor said oil theft was one of the reasons that Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, in August 2022, for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

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