Economy

Brent Slips to $42 on COVID-19 Spread Fears

Published

4 years ago

14/11/2020

By Adedapo Adesanya

Brent crude returned to the $42 mark on Friday as the oil futures depreciated on the back of the ongoing spread of coronavirus, which has dampened the demand outlook, by extension the mood of the market.

Brent, against which most countries price their crude, moved down by 1.86 per cent or 82 cents to sell at $42.71 per barrel, while the United States’ futures, West Texas Intermediate (WTI) crude, made a 2.41 per cent or 99 cents slide to $40.31 per barrel.

Depressed prices came on the back of a surge in European coronavirus cases with several countries in partial lockdowns and many hoping that restrictions will begin to have an effect as intensive care units fill up.

Countries like Belgium, Germany, Czech Republic, Spain, Poland, Austria and France have experienced spikes while Italy has recorded more than 30,000 new daily cases on three occasions in the last few days, and currently has close to 800,000. Its death toll is the second highest in Europe after the United Kingdom at more than 40,000.

There are also a growing number of cases in the US, Japan and South Korea, all of which are major oil consumers.

Further adding to the negative outcome was the downward review of demand outlook by the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC) this week.

The Paris-based IEA cut its 2020 global oil demand forecast and now expects world oil demand to contract by 8.8 million barrels per day this year.

The agency further added that it does not expect the prospect of a coronavirus vaccine to significantly boost demand until well into next year. For 2021, the IEA said world oil demand growth will rise by 5.8 million barrels per day, representing an upward revision of 300,000 barrels per day from last month.

For yet another month, OPEC revised down its expectations for global oil demand as the renewed spike in coronavirus cases in major economies is slowing down the oil demand recovery.

In its Monthly Oil Market Report (MOMR), the cartel cut its global oil demand forecast for this year by 300,000 barrels per day compared to last month’s estimate and now sees global oil demand at slightly above 90.0 million barrels per day this year, down by 9.8 million bpd compared to 2019.

The main reasons for the expected even lower demand for this year are the recent new lockdowns and curfews in many major European economies as well as weaker-than-expected demand in the developed economies in the Americas in the third quarter of 2020.

The weaker oil demand recovery is expected to continue into 2021, according to OPEC, which cut its estimate for global oil demand next year, too. In 2021, oil demand is expected to grow by 6.2 million barrels per day compared to 2020. This is a downward revision of 300,000 barrels per day compared to OPEC’s October forecast.

Next year, total global demand is expected to reach 96.3 million barrels per day, still lower than the demand before the pandemic.

At the same time, supply is rising as Libya opens the taps. The country’s production rose to 1.145 million barrels a day on Friday, according to a spokesman for its state-run National Oil Corporation (NOC)

However, the silver lining still remains as vaccines may roll out soon following announcement from Pfizer and BioNTech earlier in the week. This indicates that there are hopes that a safe and effective vaccine would help bring an end to the coronavirus pandemic that has infected more than 53.1 million and claimed over 1.3 million lives.

Economy

Again, OPEC Cuts 2024, 2025 Oil Demand Forecasts

Published

2 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.

The bloc made this in its latest monthly oil market report for December 2024.

The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.

For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.

On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.

The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.

OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.

Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.

In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.

In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.

These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.

Members have made a series of deep output cuts since late 2022.

They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.

Economy

Aradel Holdings Acquires Equity Stake in Chappal Energies

Published

7 hours ago

11/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.

This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).

Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.

Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.

As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).

The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.

In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.

The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.

“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.

“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.

“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.

“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.

Economy

Afriland Properties Lifts NASD OTC Securities Exchange by 0.04%

Published

10 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.

As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.

But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.

The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.

During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.

However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.

Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.