Oil tumbled after the Iranian Oil Minister said that an agreement by Saudi Arabia and Russia last week for oil producers to freeze output was “ridiculous.”
Crude fell 4.6 percent in New York. The proposal to cap output at January levels puts “unrealistic demands” on Iran, Bijan Namdar Zanganeh said Tuesday, according to the ministry’s news agency Shana. Saudi Arabia and Russia, the world’s two biggest crude producers, agreed to the freeze on condition other major producers, notably Iran and Iraq, follow suit. Saudi Arabia isn’t cutting output, the kingdom’s oil minister, Ali al-Naimi, said at the IHS CERAWeek oil conference in Houston.
“Zanganeh and Naimi have managed to deflate traders’ expectations that there would be an agreement to cut production anytime soon,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There’s a lot of hard bargaining and additional economic pain that’s going to have to occur before an agreement is reached.”
Oil is down about 14 percent this year on speculation a global glut will persist amid the outlook for increased exports from Iran and brimming U.S. stockpiles. Iran will add more output capacity than any other member of the Organization of Petroleum Exporting Countries over the next six years as it seeks to regain lost market share after the removal of sanctions, according to the International Energy Agency.
West Texas Intermediate for April delivery slipped $1.52 to close at $31.87 a barrel on the New York Mercantile Exchange. It was the biggest decline Feb. 9. The March contract rose $1.84 to expire at $31.48 Monday, the highest for front-month prices since Feb. 4.
Futures extended losses after the settlement when the American Petroleum Institute was said to report U.S. crude supplies rose 7.1 million barrels last week. WTI traded at $31.24 at 4:38 p.m.
Brent for April settlement dropped $1.42, or 4.1 percent, to $33.27 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $1.40 premium to WTI.
“Not many countries are going to deliver” even if they promise supply curbs, al-Naimi said. An accord last week to freeze the oil production of Saudi Arabia, Russia, Qatar and Venezuela at January levels is “not like cutting production, that’s not going to happen.”
Instead, high-cost producers will have to “lower costs, borrow or liquidate” to cope with the slump in oil prices, al-Naimi said, adding that he doesn’t know when the current rout will end. This is a “more efficient” way for the market to rebalance than cuts by low-cost producers like Saudi Arabia, which would only delay the “inevitable reckoning” needed for supply and demand to realign, he said.
“It’s hard enough getting two people to agree, much less a large number of competing countries,” said Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami. “Any deal that can be agreed to would be questionable because of the lack of trust.”
Oil has slumped more than 50 percent since Saudi Arabia led OPEC’s decision in November 2014 to maintain output and defend market share against higher-cost U.S. shale producers. The resilience of the shale sector and increase in Russian production to post-Soviet highs helped expand the global glut.
“U.S. shale output is going to decline,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “Everyone seems to think it will happen tomorrow, but it takes time. It has already started and later this year production will be considerably lower.”
Global oil stockpiles will keep accumulating into 2017 as supply continues to exceed demand, capping any price recovery, the IEA said in its medium-term report on Monday.
U.S. inventories probably expanded 3.25 million barrels from the highest level in more than eight decades, according to a Bloomberg survey before government data on Wednesday. Supplies of gasoline and distillate fuel, a category that includes diesel and heating oil, fell, the analysts said.
March gasoline futures fell 3.4 percent to close at 96.63 cents a gallon. Diesel dropped 3.1 percent to $1.0221, the lowest settlement since Feb. 11.
NNPC to Focus on Domestic Gas Growth, Says Kyari
FG, NNPC to Focus on Growing Domestic Gas Utilisation
Mr. Mele Kyari, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), has said the corporation is presenting focusing on growing domestic gas utilisation.
The Managing Director disclosed this on Tuesday during a virtual BusinessDay Energy Series Summit with the theme, “Nigeria at 60: Harnessing Nigeria’s Energy for the Future.”
The NNPC boss also said the corporation is committed to delivering key gas infrastructures such as Escravos-Lagos Pipeline System II, Obiafu-Obrikom-Oben Gas Pipeline, Ajaokuta-Kaduna-Kano Gas Pipeline, and Central Gas Processing Facilities.
He stated that NNPC was working on developing five gigawatts of power generation by 2022.
He said, “At the NNPC we are aggressively pursuing other gas development initiatives with the aim of improving Nigeria’s economy using the appropriate fuels.
“In terms of gas and power, we are developing and integrating gas and power infrastructure networks (increase interconnectivity) as well as stimulating gas demand (power generation, feedstock and transport, etc).”
Kennie Obateru, the NNPC spokesperson, quoted the NNPC boss in a statement issued in Abuja. He said the corporation was working on domestic gas utilisation to five billion standard cubic feet of gas per day.
He added that the Nigerian Liquefied Natural Gas Train 7 would be completed and delivered by 2024.
Senator Rejects Aisha Umar From North-East as PenCom DG Replacement for South-East
Law Markers Rejects President Buhari’s PenCOM Director-General Nominee
The Senate has rejected President Buhari nominated Director-General of the National Pension Commission, Aisha Umar.
Some of the Senators, who vehemently protested the nomination immediately the Senate President, Ahmad Lawan, read Buhari’s letter said Aisha Umar from the North-East should not be replacing the former DG, Mrs Chinelo Anohu-Amazu, who is from the South-East.
The aggrieved senators said the action of the president is flagrant breach of the Act that established the PenCom.
According to Section 20(1) and section 21(1) and (2) of the National Pension Commission Act 2014, states, “In the event of a vacancy, the President shall appoint replacement from the geopolitical zone of the immediate past member that vacated office to complete the remaining tenure.”
Meaning President Buhari had acted against the Act establishing the PenCom.
Speaking on behalf of the aggrieved Senators, Enyinnaya Abaribe, the Senate Minority Leader, said “I recall that the tenure of the incumbent was truncated. Therefore, the new letter from the president that has now moved the chairman of the commission to another zone may not be correct.
“It is against the law setting up the National Pension Commission and the Federal Character Commission.
“Before you (Lawan) send it to the appropriate committee tomorrow, (Wednesday), I wish to draw the attention of the committee to it.”
The Senate President, however, rejected the minority leader’s point of order and observation, saying “That is for me to interpret because I interpret the laws here. If there is any petition to that effect it should be sent to the committee.”
Electricity Regulatory Commission Suspends Tariff Increase for 14 Days
Nigerian Electricity Regulatory Commission Suspends Tariff Increase for 14 Days
The Nigerian Electricity Regulatory Commission (NERC) has suspended the increase in electricity tariff in accordance with the resolution reached between the Federal Government and the Nigerian Labour Congress and Civil Rights groups.
The commission suspended the new tariff implemented on September 1, 2020 for 14 days.
The NERC, in its Order No. NERC/209/2020 issued around 10.30 pm on Tuesday, describing the regulatory instrument as “NERC Order on suspension of the Multi Year Tariff Order 2020 for the electricity distribution licensees.”
The commission said, “This order shall take effect from 28th September 2020 and shall cease to have effect on the 11th October 2020.”
This is coming a day after the labour union agreed to halt a nationwide industrial action to allow the government fashioned out a way to address the recent increase in prices from pump price to electricity bill.
Labour had described Federal Government action as anti-people policy, especially given current economic realities.
The government on the other hand had said the hikes were touch necessary decision to advance the nation’s economy and further improve power supply and revenue generation necessary to deepen economic growth.
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