Economy
NNPC to Halt Crude Sales Discount from July
By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) will discontinue crude sales discount regime effective July this year.
This was disclosed by Mr Mele Kyari, NNPC group managing director. He said the corporation was looking at achieving the target by June 30 or latest by July.
The NNPC boss further said that if oil price settled at the current $42 or thereabout, it is still a good business for NNPC and the country.
Mr Kyari also said though Nigeria did not fully comply with a pact by oil producers to reduce crude output to balance markets, it would make additional cut to make up for the deficits by mid-July.
The crash in oil prices a couple of months back due to heavy decline in demand for crude, which was a major fallout of the COVID-19 pandemic impact, led the NNPC into offering oil traders huge discounts on Nigerian crude oil grades.
Two of Nigeria’s crude grades, Qua Iboe and Bonny Light, were to sell at discounts of $3.92 and $3.95 respectively to dated Brent.
Mr Mryari said, “Discount will go away, definitely within the shortest period of time. As you know, what we did in the last two months was to close that gap much shorter than what it was, and by the end of June or July we will see a situation where we can take out that discount because it’s no longer necessary.”
On the significance of the decision of the Organisation of Petroleum Exporting Countries and its allies under the OPEC+ family to retain their earlier production cut agreement, Mr Kyari said that was intended to bring about rebalancing in the market.
“What this means is that this will give us the rebalancing of the market, we can see a rebound in prices with time so that we don’t have to produce oil and give out for free. And we have started seeing the sign that this works.
“We are pulling down the supply and getting a balance that will come to a situation where we can at least recover our costs and get some margin out of these businesses, which is a good thing to do,” he stated.
He explained that the OPEC+ effort was to bring stability to the market and to see the probability of oil price settling between $42 and $45 per barrel.
He said, “What we did to oil price was to bring some form of stability by the end of the year, probably we can see settling at $42 to $45 at the end of the year. And you can see the short term response as a result of the OPEC+ intervention and I don’t think that is completely sustainable save the production cuts are implemented in full by the end July.
“If that happens, we see sustenance of the current level of $42 to the Brent and potentially grow to a region of $42 to $45 by the end of the year. I don’t think we will see any sort of $30 oil in the near future if this situation is sustained.”
The NNPC Chief noted that with such a price margin, the corporation would still have a good business. He had recently expressed worries when prices fell to $20 levels.
“Well, some of our assets produce at less than $30, so it’s good business today that we produce at less than $30 and we are selling at $42 or $40, then we are at comfort zone.
“The recent drive we have seen in the price of crude is largely driven by sentiments than demand because we have not seen the significant rise in the demand. There is no 100 per cent conformity with the cut and that means that the volume is still there. The price jump appears cosmetic to me and if we don’t contain the supply, we could slide to the early March price level,” he said
By Adedapo Adesanya
The Naira further slipped against the United States Dollar by N2.33 or 0.17 per cent to N1,364.88/$1 from N1,362.55/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, August 6.
In the same vein, the domestic currency weakened against the Pound Sterling in the official FX market by 71 Kobo yesterday to trade at N1,838.09/£1, in contrast to Wednesday’s value of N1,837.38/£1, but against the Euro, it gained 45 Kobo to close at N1,574.80/€1 compared with the previous day’s N1,575.25/€1.
At the GTBank FX desk, the Naira improved its value against the US Dollar by N4 on Thursday to quote at N1,369/$1 versus midweek”s rate of N1,373/$1, but at the parallel market, it remained unchanged at N1,400/$1.
The NAFEM interbank FX turnover jumped to $98.804 million on Thursday, up by more than 31 per cent from $75.357 million the previous day.
Similarly, the number of deals at the NFEM interbank increased to 106 from 82, confirming higher US Dollar flows at the official FX market.
Traders expect the Naira to hold steady, buoyed by dollar sales by the Central Bank of Nigeria (CBN), whose presence in the market will help ease demand pressure.
In the cryptocurrency market, major cryptocurrencies were mostly down as the Senate delayed a vote on the Crypto Clarity Act until at least September.
The bill, which would set out which U.S. regulator oversees which digital assets, needs 60 votes to pass, and it is unclear whether it currently has 50. Several Republican senators have said publicly they oppose it, and Democrats want stricter rules preventing President Donald Trump from profiting from crypto while in office.
Ripple (XRP) shrank by 2.5 per cent to $1.02, Solana (SOL) depleted by 1.5 per cent to $72.86, Binance Coin (BNB) fell by 1.4 per cent to $587.41, Dogecoin (DOGE) tumbled by 0.9 per cent to $0.0692, Bitcoin (BTC) decreased by 0.6 per cent to $64,344.69, and Ethereum (ETH) tumbled by 0.3 per cent to $1,902.03.
However, Cardano (ADA) appreciated by 7.7 per cent to $0.2025, and TRON (TRX) rose by 0.3 per cent to $0.3267, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Dipo Olowookere
Buying interest in consumer goods, energy and banking stocks further raised the Customs Street by 0.12 per cent on Thursday despite profit-taking in the insurance and industrial goods sectors.
According to data from the Nigerian Exchange (NGX) Limited showed that the banking index grew by 0.62 per cent, the consumer goods space rose by 0.15 per cent, and the energy counter increased by 0.06 per cent, while the insurance sector crashed by 0.93 per cent, with the industrial goods segment flat.
At the close of business, the All-Share Index (ASI) went up by 297.10 points to 245,209.34 points from 244,912.24 points, and the market capitalisation gained N191 billion to finish at N158.278 trillion compared with the previous day’s N158.087 trillion.
Eterna led the gainers’ log yesterday after it chalked up 10.00 per cent to settle at N36.30, ACA Capital improved by 9.63 per cent to N11.95, Legend Internet expanded by 9.52 per cent to N4.60, FCMB jumped by 8.55 per cent to N12.70, and Honeywell Flour surged by 7.98 per cent to N17.60.
On the flip side, Fortis Global Insurance led the losers’ chart after it shed 10.00 per cent to trade at N2.52, Ecobank declined by 9.99 per cent to N72.10, Chellarams depleted by 9.85 per cent to N11.90, Thomas Wyatt dipped by 9.83 per cent to N3.21, and UPDC slipped by 8.45 per cent to N3.25.
During the trading day, 531.8 million shares worth N20.5 billion exchanged hands in 44,826 deals compared with the 824.1 million shares valued at N25.5 billion transacted in 48,114 deals on Wednesday.
This indicated that the volume of trades was down by 35.47 per cent, the value of transactions depreciated by 19.61 per cent, and the number of deals decreased by 6.83 per cent.
The busiest stock for the session was FCMB, which traded 131.7 million units for N1.6 billion, First Holdco transacted 43.5 million units worth N6.0 billion, AVA Capital exchanged 36.3 million units valued at N432.0 million, Chams traded 36.3 million units sold 36.3 million units valued at N149.8 million, and Access Holdings ended with a turnover of 24.4 million units worth N638.8 million.
By Adedapo Adesanya
Brent crude rose by 3.83 per cent or $3.04 to $82.29 per barrel on Thursday after an information that an Iranian parliament committee was reviewing a bill that would ban US and Israeli vessels from the Strait of Hormuz.
Also, the price of the US West Texas Intermediate (WTI) crude futures went up by 81 cents or 1.05 per cent to $77.29 per barrel during the session.
Under the apparent draft, Iran would ban American and Israeli ships from transiting the strait. Other nations that have harmed Iran would not be allowed to transit until compensation is paid, according to the draft. Iran would impose penalties on violators equivalent to 20 per cent of the value of cargo aboard a ship.
Market analysts noted that crude traders remain focused on the US-Iran agreements, and the longer the delays, the more prices will fade back to the upside.
Iran has warned Gulf states that any new US attack on its territory would trigger attacks on critical energy infrastructure across the region.
Before the Iran conflict began in late February, about one-fifth of global daily oil and liquefied natural gas supplies flowed through the Strait of Hormuz.
Meanwhile, Yemen’s Houthis said they carried out missile and drone attacks on “Saudi deployments” in Marib and Hadramout in Yemen on Thursday. This has led to elimination of Saudi-aligned fighters as well as destruction of military camps, weapons depots and vehicles.’
Also, Iran and Oman appear to be close to agreeing on joint management of the Strait of Hormuz with Iran’s foreign ministry spokesman, Esmaeil Baghaei, saying the deal with Oman was “in the final stages.”
Saudi Arabia has slightly lowered the official selling price for its flagship Arab Light crude oil to Asia in September.
Elsewhere, a major oil refinery in Russia’s Yaroslavl region was on fire after a big Ukrainian drone attack. The President of Ukraine Volodymyr Zelenskiy said the country’s military had hit two Russian oil refineries – the Bashneft-Novoil refinery in the republic of Bashkortostan, and the Slavneft-Yanos refinery in the Yaroslavl region.
