- Oil Prices Dip Over Global Economic Slowdown
Oil prices dipped on Friday, with US crude heading for a seventh weekly decline amid increasing concerns about slowing global economic growth that could hit demand for petroleum products as inventories build.
Brent is heading for a two per cent decline this week, a third consecutive weekly drop.
West Texas Intermediate, light crude oil is on track for a seventh week of losses, with a fall of more than three per cent.
Traders said the main drags on prices were the darkening economic outlook due to trade tensions between the US and China, and weakening currencies in emerging economies that are weighing on growth and fuel consumption.
US investment bank Jefferies said on Friday there was an emerging “lack of demand” for crude oil and refined products.
Singaporean bank said on Friday that Chinese data showed a “steady decline in activities” and that “the economy is facing added headwinds due to rising trade tensions with the US.”
Also, just as demand seems to be slowing, supply may be rising, increasing the drag on markets.
“Investors remain cautious as Wednesday’s surprise gain in US stockpiles remained fresh in their minds,” the bank said on Friday.
A weekly report on US drilling activity is due to be published later on Friday by energy services firm Baker Hughes.
In spite of these bearish factors, analysts said prices were prevented from falling further because of US sanctions against Iran, which target the financial sector from August and will include petroleum exports from November.
“Iranian crude exports were still near two million barrels per day in July and will likely begin to fall dramatically in August with financial sanctions taking effect. With oil export sanctions now three months out, we expect exports to fall by more than 500,000 bpd by the end of 3Q,” Jefferies said.
“We maintain our view that Brent prices will exceed $80/bbl before the end of the year,” he said.
Oil Prices Decline on Rising COVID-19 Cases
Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally
Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.
Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.
Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.
“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.
Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.
As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.
This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.
In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.
We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos
Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff
The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.
Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.
The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.
Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.
“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.
The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.
Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries
Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations
The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.
Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.
The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”
Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.
“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.
“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”
He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.
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