Economy
Crude Oil Weakens on Bearish US, German Economic Outcomes
By Adedapo Adesanya
Crude oil depreciated on Monday as some bearish economic news from the United States and Germany offset support from a weaker US Dollar and forecasts for increased heating demand for energy from a winter storm.
Consequently, Brent futures fell by 21 cents or 0.3 per cent to settle at $76.30 a barrel and the US West Texas Intermediate (WTI) crude depleted by 40 cents or 0.5 per cent to trade at $73.56 per barrel.
In the US, the world’s biggest economy, new orders for manufactured goods fell in November amid weakness in demand for commercial aircraft while business spending on equipment appeared to have slowed in the fourth quarter, according to data from the Commerce Department’s Census Bureau.
In Germany, Europe’s biggest economy, annual inflation rose more than forecast in December due to higher food prices and a smaller drop in energy prices than in previous months.
To combat higher inflation, central banks often boost interest rates, which can slow economic growth and demand for energy.
Meanwhile, the market is looking at the weather as a winter storm occured across the US, causing prices for natural gas and heating fuel to spike 10 per cent on Monday, while diesel futures closed at their highest level since October.
Severe travel disruptions were expected across the storm’s path and officials urged drivers to stay off the roads if possible.
Governors in several states, including Kansas, Kentucky, Arkansas, West Virginia, Virginia and Maryland, have declared states of emergency.
Support also came as the US Dollar slumped more than 1 per cent against a basket of other currencies as President-elect Donald Trump reportedly mulled tariffs that would only be applied to critical imports, potentially a relief for countries that were expecting broader levies.
The US Dollar, however, pared much of that decline after Mr Trump denied the newspaper report.
A weaker US currency makes dollar-priced commodities like oil cheaper for buyers using other currencies.
In China, the world’s second-biggest economy, the Yuan ended the domestic session at its weakest level in 16 months against the US Dollar, weighed down by trade concerns.
In a sign of firmer demand expectations, Saudi Arabia, the world’s top oil exporter, raised crude prices for Asian buyers in February for the first time in three months.
Sudan, meanwhile, lifted a nearly year-long force majeure on the transport of crude oil from its neighbour South Sudan to a port on the Red Sea after security conditions improved.
Also, the Biden administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude
By Dipo Olowookere
Customs Street came under massive sell-offs on Tuesday, triggered by the rebalancing of portfolios by investors, leading to a 0.24 per cent decline at the close of business.
None of the five major market segments ended in the green territory during the trading session as the closest, the industrial goods space, closed flat.
The insurance counter depreciated by 7.68 per cent, the banking index shrank by 0.64 per cent, the consumer goods sector tumbled by 0.38 per cent, and the energy counter declined by 0.10 per cent.
Consequently, the All-Share Index (ASI) plunged by 249.42 points to 103,398.82 points from 103,648.24 points and the market capitalisation tumbled by N153 billion to close at N63.051 trillion compared with the previous day’s N63.204 trillion.
Business Post reports that investor sentiment turned bearish yesterday as a result of profit-taking, resulting in a negative market breadth index after the Nigerian Exchange (NGX) Limited recorded 19 price gainers and 51 price losers.
FTN Cocoa, RT Briscoe, and Veritas Kapital lost 10.00 per cent each to trade at N1.80, N2.70, and N1.53, respectively, as Sunu Assurances shed 9.98 per cent to quote at N10.01, and Cornerstone Insurance also waned by 9.98 per cent to N4.15.
The duo of PZ Cussons and Abbey Mortgage Bank gained 10.00 per cent each to settle at N27.50, and N3.63, Learn Africa improved by 9.90 per cent to N5.44, NCR Nigeria jumped by 9.77 per cent to N7.30, and NGX Group soared by 9.72 per cent to N29.90.
Yesterday, investors bought and sold 1.1 billion shares worth N14.6 billion in 16,617 deals versus the 856.0 million shares valued at N13.3 billion traded in 16,505 deals on Monday, representing a rise in the trading volume, value, and number of deals by 29.94 per cent, 9.77 per cent, and 0.68 per cent, respectively.
The activity chart was led by FBN Holdings with 161.5 million equities worth N4.7 billion, AIICO Insurance exchange 120.7 million shares valued at N225.4 million, Tantalizers traded 104.8 million stocks for N267.4 million, Universal Insurance transacted 93.8 million shares valued at N78.1 million, and Regency Alliance sold 47.3 million equities worth N44.6 million.
By Adedapo Adesanya
About 395,000 barrels per day of crude oil were delivered to the Dangote Refinery in December under the crude-for-Naira deal with the federal government through the Nigerian National Petroleum Company (NNPC) Limited.
The volume of black gold supplied to the Lagos-based facility was 40 per cent higher than the 280,000 barrels per day delivered in November.
According to a report from Argus, the crude receipts at the 650,000 barrels per day capacity Dangote refinery rose to a new high in December.
It gathered the data from its tracking systems as well as from Kpler and Vortexa data.
The report said that this was the fourth consecutive month that crude deliveries were all Nigerian and did not include any US WTI.
Deliveries of WTI had been anticipated in December, but did not materialise.
The Dangote Group said it is aiming for 350,000 barrels per day throughput in a first phase of operations.
It had achieved this mark in June as receipts hit 350,000 barrels per day but fell back after that. Since March, when crude delivery began to increase, estimated receipts have averaged a little under 275,000 barrels per day.
Recall that Dangote Refinery had bought some foreign cargoes when NNPC could not adequately supply it with the needed resources.
In July, President Bola Tinubu directed the NNPC to commence sales of crude oil in Naira to local private refiners as part of efforts to boost domestic capacity and reduce foreign exchange pressure on the economy.
Last month’s receipts included cargoes of Nigerian grades Escravos, Bonny Light, CJ Blend, Qua Iboe, and Erha.
Bonny Light was the largest single grade at 140,000 barrels per day.
It was disclosed that three deliveries on very large crude carriers (VLCC) helped boost receipts in the review month.
Argus added that no cargoes of Forcados or Amenam were delivered to Dangote last month, having previously been regular grades at the refinery.
Dangote Group is also maintaining a very consistent slate in terms of gravity and especially sulphur content.
Argus assessed Dangote’s December slate at a weighted average gravity of 36.3°API and under 0.2 per cent sulphur content, compared with 36.4°API and under 0.2 per cent sulphur in November. In March-December, the slate averaged 36.3°API and again, under 0.2 per cent sulphur.
By Adedapo Adesanya
Seplat Energy plans to increase its crude oil production by 140 per cent from about 50,000 barrels a day to roughly 120,000 barrels per day over the next six months, a top executive management disclosed this in a series of interviews with the Financial Times.
Recall that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October 2024 approved Seplat’s acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil as part of a series of approvals.
The completion of the $1.28 billion Seplat-ExxonMobil deal has created Nigeria’s leading independent energy company, with the enlarged company having equity in 11 blocks (onshore and shallow water Nigeria); 48 producing oil and gas fields; 5 gas processing facilities; and 3 export terminals.
The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (‘BRT’) NGL recovery plant; 9.6 per cent participating interest in the Aneman-Kpono field; and approximately 1,000 staff and 500 contractors will transition to the Seplat Group.
“The assets have had very minimal investments until now,” the oil major’s chief financial officer, Mrs Eleanor Adaralegbe, told the newspaper.
“We expect that once we come in there will be an opportunity to grow that much further,” she added.
The company also plans to revive hundreds of Nigerian oil wells laying fallow, which according to Seplat’s chief executive, Mr Roger Brown, will be done in a collaborative effort with the state-owned Nigerian National Petroleum Company (NNPC) Limited as legally mandated in the country’s oil and gas industry.
“We have no concerns working with NNPC . . . There’s been a massive change with President Tinubu, realising that production is a great way of getting dollars into the country and supporting the currency,” Mr Brown said.
This was backed up by Seplat’s chief operating officer, Mr Samson Ezugworie, who noted that some of the assets will require time and investment so they can begin to produce again after being left idle.
“We have over 600 wells drilled and barely 200 of them are producing. We have significant idle wells that need to be rejuvenated and brought back into production within a short period of time.”
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