Economy
Cold Weather Demand, Positive China Stimulus Move Buoy Oil Prices
By Adedapo Adesanya
Cold weather in Europe and the United States added to the positive development around economic stimulus in China to raise the prices f crude oil grades on Friday, January 3.
Brent crude futures were up by 69 cents or 0.9 per cent to trade at $76.62 per barrel and the US West Texas Intermediate (WTI) crude futures gained $1.11 or 1.5 per cent to $74.24 a barrel.
For the week, Brent rose by 3.3 per cent while WTI made a 5 per cent increase.
The price was up on signs that the Chinese economic situation has created expectations of policy measures to boost growth in the world’s top oil-importing country.
Market analysts noted that China is stepping up in terms of their announcements about trying to stoke economic activity and the market is taking note of that.
Worries about Chinese demand were a factor in bearish demand assumptions last year, leading to major policy changes, including extensions by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+.
The world’s largest oil importer announced a couple of new measures to boost growth this week with a surprise move to raise wages for government workers and the announcement of a sharp increase in funding from ultra-long treasury bonds.
The additional funding is to be used to spur business investment and consumer-boosting initiatives.
Also, weather lent support as early signals showed an expected increase in demand for heating oil- a product of crude oil – after forecasts for colder weather in some regions.
Based on trends, oil demand is more likely to benefit from cold temperatures across Europe and the US.
Supporting prices were US crude stockpiles dropping by 1.2 million barrels to 415.6 million barrels last week, according to data by the Energy Information Administration (EIA) just as US gasoline (petrol) and distillate inventories jumped as refineries ramped up output while fuel demand hit a two-year low.
However, a stronger US Dollar impacted prices which was on track for its best week in about two months.
A stronger greenback makes oil expensive for holders of other currencies.
This happened on expectations that the US economy will continue to outperform its peers globally this year and that US interest rates will stay relatively higher.
Higher rates increase borrowing costs, which can cut economic growth and oil demand.
By Modupe Gbadeyanka
Nigerians may soon begin to purchase petroleum products at the retail stations of Heyden Petroleum and Ardova Plc across Nigeria at lower prices.
This is because the two players in the nation’s downstream petroleum sector have entered into a bulk purchase agreement with the Dangote Petroleum Refinery.
Recall that a few weeks ago, MRS Oil Nigeria Plc sealed a deal with Dangote Refinery, enabling it to sell premium motor spirit (PMS), otherwise known as petrol, at N935 per litre across all its stations nationwide, addressing the long-standing issue of price disparities between states.
This action pushed the share price of MRS Oil at the Nigerian Exchange (NGX) Limited to a new 52-week high last Friday, as investors became increasingly optimistic about the company’s future earnings prospects.
Propelled by the economic relief provided by President Bola Tinubu’s crude-for-naira swap initiative, Ardova Plc and Heyden Petroleum agreed to join Dangote Refinery to bring down the prices of petroleum products.
Reports indicate that the bulk purchase agreement with Dangote Petroleum Refinery will enable both Ardova and Heyden to secure a reliable and consistent supply of petroleum products from the world’s largest single-train refinery, ensuring a stable supply of fuel at competitive prices, benefiting consumers across the country.
The arrangement ensures that Ardova and Heyden will have access to a full range of refined products, thereby securing their operations with a reliable supply chain.
The partnership with Dangote Refinery is poised to have a transformative impact on Nigeria’s oil and gas market. By ensuring a stable and affordable supply of fuel products in the over 1,000 retail outlets of the two companies, the agreement will help to alleviate the recurring issue of fuel scarcity that has long plagued Nigeria.
“This framework will see Ardova Plc offtake a full slate of petroleum products from the refinery. While Ardova Plc has been a significant off-taker from the refinery since its inception, this new framework will institutionalise a more robust relationship between the two companies to further enhance the emerging competitive landscape in the downstream oil and gas industry in the country,” a statement from Ardova stated.
Ardova has been a key off-taker from the Dangote Refinery since its inception, but this new framework is expected to formalise and strengthen the partnership between the two companies, creating long-term benefits for both parties.
The Dangote Refinery, which began production in 2024, has already played a pivotal role in addressing these challenges. Its large-scale operations have helped alleviate the supply pressures that often lead to price hikes and fuel shortages.
By Aduragbemi Omiyale
All shares of Flour Mills of Nigeria Plc have been delisted from the Nigerian Exchange (NGX) Limited trading platform.
This development was confirmed in a notice issued by the bourse last week to the investing public.
The disclosure was signed by the Head of the Issuer Regulation Department of the NGX, Mr Godstime Iwenekhai.
Before the action was taken, the stock exchange had suspended trading in the shares of the company ahead of its exit from the market.
“We refer to our market bulletin of 16 December 2024 with reference Number: NGXREG/IRD/MB93/24/12/16 wherein the market was notified of the suspension placed on trading in the securities of Flour Mills of Nigeria Plc in preparation for the delisting of the company.
“Following the approval of the company’s application to delist its entire issued share capital from Nigerian Exchange Limited (NGX), please be informed that the entire issued share capital of Flour Mills of Nigeria were on Monday, December 30, 2024, delisted from the daily official list of NGX,” the statement said.
Flour Mills is leaving the local equity market after its majority shareholders agreed to acquire the stocks held by minority investors at N86 per unit.
The organisation is embarking on an ambitious $1 billion investment plan to expand its presence and impact across the African continent over the next four years, which is anticipated to create new opportunities and unlock value for the company, its employees, and economies throughout Africa.
By Adedapo Adesanya
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has asked President Bola Tinubu to help oil marketers with N100 billion in intervention to help 10,000 filling stations stay afloat amid current economic realities.
The group made up of owners and stakeholders in private petrol stations once again asked the federal government to privatise state-owned refineries, with the old Port Harcourt and Warri refineries coming online recently.
In a statement over the weekend, titled PETROAN’S Retrospect of Nigeria’s Oil and Gas Downstream Sector 2024, the association listed several groundbreaking moves in the sector in the outgone year.
But it recommended the privatisation of “Nigerian-owned refineries, such as the Warri and Kaduna refineries, to reputable private companies to improve efficiency and reduce government spending”.
PETROAN in a statement signed by its President, Mr Billy Gillis-Harry, national secretary, Mr Adedibu Aderibigbe, and spokesman, Mr Joseph Obele, said the grant request is to avoid the closure of oil marketers’ businesses.
This, it said, is “to help prevent the closure of 10,000 marketers’ businesses. The request is in response to the threat of job losses that would result from the removal of the fuel subsidy.”
The association called on authorities to work with “neighbouring countries to strengthen border security and prevent smuggling, and also utilize digital tracking systems to monitor petroleum products from refineries to retail outlets”.
“To boost Nigeria’s refining capacity and reduce reliance on imported petroleum products, we strongly recommend that crude oil be made available for local refineries,” the statement read.
“This strategic move will have a positive impact on the country’s economy and energy security. By prioritizing local refineries’ access to crude oil, Nigeria can unlock the full potential of its refining sector, drive economic growth, and enhance energy security.”
PETROAN reiterated that it wants a “competitive market by encouraging new entrants and promoting a level playing field to prevent monopolies and ensure fair pricing”.
Recall that in November 2024, the group said it was willing to engage in a price war with Dangote Refinery.
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