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Gold and Bitcoin - Investors King

Tightening Continues Amid Higher Inflation

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

 

Another mixed session on Wednesday, with Europe edging lower once more and US posting small gains early in the day.

There is so much focus on the inflation outlook right now and what policymakers are doing to get to grips with it. Two central banks have raised interest rates by 50 basis points today and the Fed is expected to follow that with a similar move in a couple of weeks’ time.

The moves from the RBNZ and BoC were not surprising, although the consensus for the former was 25 basis points prior to the meeting with the potential for an upside surprise. But they do support the view that more needs to be done now from central banks to avert the need for more later, with most viewed to already be late to the party.

US data on Tuesday allayed some inflation fears in the markets, with CPI being almost in line with expectations while the core reading was actually a little lower. It was still far too high but ended a period of above consensus readings which may be a sign of inflation peaking.

The same cannot be said in the UK, where inflation was once more well above expectations at 7%. The core number was a little lower at 5.7% but as with the headline that was well above the consensus forecast. And with the energy price cap only rising in April – by 54% – the peak is yet to come, with forecasts putting that around 8.5% this month.

While the BoE was among the first to start its tightening cycle, raising at three consecutive meetings since December, there’s no less pressure on them to continue their tightening cycle with rates seen rising much further over the course of the year. The apparent cooling in the hawkish language after the last meeting may be short-lived if recent economic reports are anything to go by.

Oil pushing higher as OEPC continues to disappoint

Oil prices are continuing to push higher after spiking on Tuesday. The slight easing of restrictions in China and pushback from OPEC to EU requests for higher output triggered a sharp rally yesterday just as the price was flirting with double digits. Chinese restrictions have weighed on demand forecasts and eased the pressure on prices recently but that was always likely to be temporary.

Longer-term, the market remains very tight and with plenty of upside risks in the price. Russian output remains a source of uncertainty given the impact of the war in Ukraine on its exports. While the reluctance of OPEC+ to significantly raise output – well, those within the group that can – isn’t helping ease the pressures in the market. Even OPEC hitting current targets would help.

Gold eyeing $2,000 on day six of the rally

Inflation concerns appear to be driving the latest move in gold which is rallying for a sixth consecutive day. After breaking through the upper end of its range in recent days, the yellow metal appears to have its sights on $2,000 which would be a major psychological breakout at a time when central banks are expected to hike as aggressively as they are.

There isn’t an abundance of risk aversion in the markets at the moment, although investors will no doubt continue to be cautious in such a highly uncertain environment. There appears to be plenty of momentum in the rally at the moment which could make the test of $1,980 resistance interesting.

Bitcoin seeing some reprieve after a rough week

Bitcoin is enjoying a bit of a recovery alongside other risk assets today. It’s suffered so far this week and spent a bit of time below $40,000 as a result which could have been the catalyst for further pain. But it’s showing a little resilience today, up around 3%, and now the test becomes $42,000 which has previously been a level of interest.

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Energy

African Energy Chamber to Host Energy Transition Forum at The 2022 Energy Week  

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Oil

African Energy Chamber (AEC) says it will host the Energy Transition Forum, in partnership with public and private sector organisations, government representatives, energy stakeholders and investors in October. 

In a statement made available to Investors King AEC stated that “The Energy Transition Forum will address critical issues such as the lack of adequate funding, the diversification of the energy mix, workforce development, and regulatory reforms necessary to enable Africa to expand its energy sector to address energy security, affordability, access, and sustainability matters”.

“With some 600 million people across the continent living in energy poverty and over 900 million without access to clean cooking, Africa needs to exploit all of its vast natural resources in order to make energy poverty history by 2030. In this respect, stakeholders across the continent are opting for an integrated approach to developing energy resources whereby every resource is utilized in order to kickstart economic growth and electrification. With over 125.3 billion barrels of crude oil, 620 trillion cubic feet of gas, and nearly 16.4 billion short tons of coal, the continent is well-positioned to drive economic growth,” it added. 

Executive Chairman of the AEC, NJ Ayuk, said: “With nearly 66 per cent of the world’s population living without electricity access based in Africa, the continent needs to ramp up the production of all its energy resources including gas, oil, wind and solar to ensure energy poverty is history by 2030. The AEC is honored to host the Energy Transition Forum at AEW 2022 where an African narrative of a just and inclusive energy transition that is fit for Africa will be developed. We will go from Cape to Cairo with a well-defined African message. Africans and the energy sector have a rare chance to define the narrative and we must.” 

The Energy Transition Forum is bringing together investors, regulatory authorities and energy market players to discuss the role of gas in Africa’s energy future and energy transition. The challenges of limited investments in gas exploration, production, and infrastructure development in gas-rich countries such as Nigeria, Algeria, Egypt, Niger, and Mozambique will also be addressed.

According to the AEC, climate change continues to impact Africa, leading to an increasing number of African countries such as Nigeria, Namibia, Morocco, South Africa, Uganda, and Kenya introducing policy reforms and initiatives to scale up renewable energy penetration in Africa. 

Investors King gathered that Nigeria has vowed to achieve climate neutrality by 2060 by increasing the share of natural gas and renewables in its energy mix while Namibia aims to make the development of hydrogen central to its energy policy. At the same time, South Africa has introduced its Hydrogen Society Roadmap to fast-forward the development of local content and hydrogen infrastructure whilst Morocco’s Law 13-09 and Egypt’s net metering scheme aims to expand distributed renewables development.

The chamber added that the AEW 2022, under the theme – “Exploring and Investing in Africa’s Energy Future while Driving an Enabling Environment” will feature high-level meetings and panel discussions where government ministers, investors, academia, and energy market stakeholders will discuss how Africa can attract funding to boost exploration, production and infrastructure development to ensure secure supply while remaining a climate champion. 

The African Energy Week is scheduled to take place from 18th – 21st October 2022 in South Africa at Africa’s premier event for the oil and gas sector.

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Energy

Siemens Announces Plan to Transit From Fossil to Sustainable Energy

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Siemens

Technology giant, Siemens Energy has announced a transit from fossil to sustainable energy through a management restructuring and shares evaluation.

This comes after the company launched a voluntary cash tender offer to acquire all outstanding shares in Siemens Gamesa Renewable Energy, or approximately 32.9 percent of Siemens Gamesa’s share capital which it does not already own.

Chairman of the Supervisory Board of Siemens Energy AG, Joe Kaeser, said: “The full integration of SGRE is an important milestone for Siemens Energy’s positioning as a driver of the energy transition from fossil to sustainable energy solutions.

“This will benefit customers, employees, shareholders, and ultimately society. It is critical that the deteriorating situation at SGRE is being stopped as soon as possible, and the value-creating repositioning starts quickly. The Supervisory Board strongly supports the Executive Boards plans for the integration of SGRE”.

According to a statement from the company, starting from October, the former gas and power segment will be divided into three business areas.

The largest of the new business areas, with sales of around 9 billion euros (9.6 billion dollars), is gas services. This included the gas and large steam turbine business and associated services.

It is followed by grid technologies with sales of 5.8 billion euros in the areas of power transmission and energy storage. The smallest business area is the transformation of the industry with sales of 3.9 billion euros.

Here, the focus was on reducing energy consumption and carbon dioxide emissions in industrial processes from hydrogen to automation and industrial steam turbines to compressors. Logistics, IT and procurement divisions were to be bundled together.

The removal of some levels of management at Siemens Energy was expected to bring faster decision-making processes. Where there were previously up to 11 levels in the firm’s hierarchy, there would be a maximum of six in the future. This would eliminate around 30 per cent of the previous management positions, Siemens Energy said. The employees affected would be given other tasks within the business, according to the statement.

Siemens Energy claims that after full integration, the combined group could see cost synergies of up to EUR 300 million within three years, owing to lower supply chain and logistics costs, aligned project execution, joint and integrated R&D efforts, and cost savings through an optimized administrative setup.

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NNPC, Sahara Group To Invest Over N150B in Two Gas Carriers

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Gas Exports Drop as Shell Declares Force Majeure

The Nigerian National Petroleum Company Limited (NNPC) and leading energy conglomerate, Sahara Group have taken delivery of two 23,000 CBM Liquefied Petroleum Gas (LPG) vessels at the Hyundai MIPO Shipyard in Ulsan, South Korea.

The new carriers, the MT BARUMK and MT SAPET, have brought NNPC and Sahara Group’s joint venture investment to over N150 billion ($300 m), bringing the Joint venture’s (JV) gas infrastructure pledge to $1 billion by 2026 closer to reality. MT Sahara Gas and MT Africa Gas were previously part of the fleet. Hyundai MIPO Dockyard, a leading global constructor of mid-sized carriers, produced all four ships.

Recall, Investors King reported that Nigeria earned $868.5 million from gas exports and N13.36 billion from domestic gas sales, according to an examination of the gas revenue statistics and other monthly reports acquired from the Nigerian National Petroleum Company Limited.

Data from the oil firm showed that the Federal Government, through NNPC, garnered the funds from the sale of Natural Gas Liquids/Liquefied Petroleum Gas, as well as Nigeria Liquefied Natural Gas feedstock.

West African Gas Limited (WAGL), a joint venture between NNPC and Oceanbed (a Sahara Group subsidiary), is driving NNPC’s five-year $1 billion investment plan which was announced in 2021, to expedite the decade-long gas and energy transition strategy.

To the joy of visitors, NNPC’s GMD, Mele Kyari, announced that an order for three more new vessels was being finalized, adding, “We have an objective of delivering 10 vessels over the next 10 years. In our energy transformation quest, the NNPC and our partners stand out for their integrity, and our commitment to environmental sustainability is steadfast.”

WAGL and Sahara Group have invested in the JV with MT BARUMK and MT SAPET. WAGL is strengthening its gas fleet and terminal infrastructure, while Sahara Group continues to make significant progress in the development of over 120,000 metric tonnes of storage facilities in 11 African nations, including Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania, and Zambia.

“This is another epoch-making achievement for the NNPC and Sahara Group, and we remain firmly committed to delivering more formidable gas projects for the benefit of Nigeria and the entire sub-region,” Kyari said.

Executive Director Sahara Group, Temitope Shonubi stated that “WAGL has successfully operated two mid-sized LPG Carriers MT Africa Gas and MT Sahara Gas in the region in accordance with worldwide standards, transporting over 6 million CBM of LPG across West Africa, with the new vessels, we will be able to accelerate and lead Africa’s energy revolution.”

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