- Oil Prices Close Lower on Monday
Global uncertainty continues to dictate the direction of global oil prices despite OPEC extending production cuts into 2020.
Brent crude oil, against which Nigerian oil is measured, closed at $63.90 a barrel on Monday, down from $65.11. While the US West Texas Intermediate closed at $57.52, down from $58.44.
This was after Gibraltar, a British Territory, seized Iranian supertanker heading to Syria with oil. An event expected to have bolstered oil prices, yet prices closed lower on Monday. Suggesting that there is more to the current situation than just global supply.
Presently, there is U.S sanction on Iran and Venezuela exports, while Libya is in the middle of civil war with little to almost zero oil exports. Again, OPEC and allies have agreed to extend 1.2 million barrels per day cut until March 2020, but still oil prices remained low.
Two factors are likely responsible, weak demand growth and rising US oil supplies.
Weak Demand Growth
Global trade war between the U.S and China has impacted global demand and investment in the energy sector. The tariffs imposed on Chinese exports to the U.S as a result of the disagreement has started hurting growth in the world’s second largest economy and the largest importer of crude oil.
This drop in economic growth weighs on crude oil demand from Chinese firms and subsequent hurt oil nations depending on China for sales.
Investors are more concern about trade war than OPEC strategy, therefore, most are still holding back until there is enough clarity regarding the position of the two nations.
Rising US Oil
According to Goldman Sachs, US crude oil production will outstrip global oil demand this year.
US production is projected to rise by 1.3 million bpd in 2019 and 1.2 million bpd in 2020. While global demand is expected to slow to just 800,000 bpd.
Therefore, despite OPEC extending cuts to the end of March 2020, global supplies may not really change.
Waltersmith’s 5,000bpd Modular Refinery in Imo State to Commence Operations
5,000bpd Modular Refinery Built in Imo State to Start Operations
The Department of Petroleum Resources (DPR) has said the 5,000 barrels per day Modular Refinery project built in Imo State is ready for operations.
Sarki Auwalu, the Director, DPR, disclosed this during a pre-commissioning visit to the project site in Ibigwe, Imo State.
In a statement released by Waltersmith, Auwalu was quoted as saying the purpose of his visit was to ensure that the refinery was ready to commence operations.
He said “We can confirm that the refinery is very much ready to commence operations. We have seen all the preparations.
“To us, the plant is alive. The commissioning is just symbolic. Everywhere is ready to start off. My overall assessment is excellent.
“We have been to other modular refineries but we have not seen anything like this – the space, the way it is arranged and the way it will work.”
The 5,000 barrels per day modular refinery is scheduled for inauguration this month. The refinery has crude oil storage capacity of 60,000 barrels and it is expected to deliver more than 271 million litres per year of refined petroleum products.
Auwalu said, “The role we play is to enable businesses and create opportunities. When DPR issues you a licence, it enables you to invest and as a result of that opportunity we create, that business is enabled.
“Waltersmith is one of our success stories. We consider the project as ours. We have been tracking their growth and we are happy to see that our child is growing. It is our plan that they expand and they have the potential.”
Speaking on the project, Abdulrasaq Isah, the Chairman, Waltersmith Refining and Petrochemical Company, said the project is the first phase of a series of refinery projects that will lead to the delivery of up to 50,000 barrels per day in refining products.
OPEC Fund, West African Development Bank Agree to Improve Corporation in West Africa
OPEC Fund and West African Development Bank (BOAD) Agreed to Deepen Corporation in West Africa
The West African Development Bank (BOAD) and the OPEC Fund for International Development have signed an agreement to further deepen their development corporation in the member nations of the Western African Economic and Monetary Union (WAEMU).
The member nations include Benin, Burkina Faso, Côte-d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
According to the statement released by the two organisations, the agreement reached will increase engagement and knowledge-shareing between the two institutions and ensures improved cooporation in terms of co-financing public and private sector projects.
The OPEC Fund and West African Development Bank (BOAD) boost cooperation in Western Africa
The agreement focuses on increased engagement and knowledge-sharing between the two institutions and ensures enhanced cooperation in co-financing public and private sector projects.
It will also support international trade and regional trade integration to enhance economic productivity in the region. It will help mitigate the negative impact of COVID-19 on the region and strengthen the economy of the West African region.
Dr. Abdulhamid Alkhalifa, Director-General, OPEC Fund, who signed on behalf of the organisation said: “We are pleased to grow our partnership with BOAD to work together toward our common cause. West African countries have significant potential to increase trade flows and strengthen competitiveness which will drive growth, reduce poverty, and create new jobs in the region. The OPEC Fund’s global expertise, combined with BOAD’s strong regional presence, positions our two institutions well to help the region to weather the impacts of the pandemic and improve its competitiveness within the global economy.”
Serge Ekué, the President of BOAD, commended “the commitment and growing partnership between Africa and the OPEC Fund, which translated into support to BOAD for several decades now, thereby contributing to growth and sustainable development in the WAEMU member countries.” He added that the implementation of this framework agreement will help support the objectives of BOAD’s new strategic plan for 2021-2025, with the “aim of increasing the impact of its operations in terms of development outcomes by funding productive investments and creating jobs for youth and women, while focusing on micro-, small- and medium-sized enterprises (MSMEs), transport infrastructure and digitalization, agriculture and food security, energy, real estate, health and education.”
More Stimulus is Welcomed – But What’s Needed is Smarter Stimulus
Stock markets are cautiously upbeat that a stimulus package can be agreed in the U.S. before the November 3 election – but even if it does happen, it’s likely to be a “short-lived sticking plaster” that masks the major long-term issue: unemployment.
This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organizations.
It comes as House Speaker Nancy Pelosi and Secretary Steven Mnuchin spoke again on Tuesday – the deadline imposed by the Speaker – as the two sides try and strike a deal over another significant fiscal stimulus package ahead of the election.
Earlier this month, Republican senators slammed a $1.8 trillion offer made by the Trump administration to the Democrats as too big, an offer Ms Pelosi dismissed as “insufficient.”
Discussions are due to continue on Wednesday upon the Secretary’s return to Washington.
Nigel Green warns: “No doubt, a breakthrough of the deadlock that would allow for more stimulus would provide a lifeline to millions and millions of Americans.
“U.S. and global markets are, generally, cautiously optimistic that a deal can be agreed by the two sides.
“There’s a sentiment that something will have to materialize – and this is fueling markets.
“However, the window of opportunity is closing and it is not yet a done deal.
“If talks collapse, the markets will inevitably be disappointed and there’s likely to be a short-lived sell-off.”
He continues: “Even if Pelosi and Mnuchin can get another massive stimulus package agreed, and U.S. and global markets rise, this is likely to serve only as a sticking plaster.
“A market rally is going to be difficult to be sustained due to the enormous uncertainty created by other factors including the presidential election, a possible looming constitutional crisis in the world’s largest economy, and the growing Covid-19 infections in America and other major economies.”
The deVere CEO goes on to add: “Getting over the political impasse would help boost the economy and deliver much-needed money to Americans, but the major, lasting issue triggered by the pandemic remains: mass unemployment, which will hit demand, growth and investment.
“As such, a swift rebound for the U.S. economy is doubtful as unemployment claims continue to rise.
“That V-shaped recovery talked about by so many? That will be impossible with so many millions facing long-term unemployment.”
Whilst it is certainly positive that unemployment has fallen from 15% in the U.S. to 11% in recent weeks, it should be remembered that this is still at the same rate of the 2008 crash.
In addition, a second wave of soaring unemployment could hit imminently as some support measures wind-down and business’ and households’ savings and resources have been already run-down.
Mr Green concludes: “Near-term support for sure, but a long-term strategy – a multi-year vision – for growth and investment is essential.
“What’s needed is not just more stimulus, but smarter stimulus.”
Forex2 weeks ago
Naira Improves Against Global Counterparts on Black Market
Business1 week ago
Buhari Budgets N420 Billion for Npower, Other Social Investment Programmes in 2021 Budget
News4 weeks ago
Jumia Boss Juliet Anammah is Now Flour Mills Board of Director
Technology4 weeks ago
Dell Partners Other Firms to Establish Tech Centre in Nigeria
Government2 weeks ago
#Endsars: Naira Marley Calls Off Protest following Police Invitation
News4 weeks ago
Laycon Bbnaija Biography, Career and Health Issue
News3 weeks ago
Npower News: Beware of Fake Npower Employment, Ministry Warns Exited Beneficiaries
News4 weeks ago
Angry South Africans Protest in Front of Nigerian Embassy, Demand Deportation of Illegal Immigrants