Economy

Oil Plunges 5% on Worrying US Fuel Demand

Published

1 year ago

05/10/2023

By Adedapo Adesanya

It was not a pleasant day for the oil market on Wednesday as it went down by more than 5 per cent amid fuel demand destruction and a worrying macroeconomic outlook affected the market.

Brent crude oil futures lost $5.11 or 5.6 per cent to settle at $85.81 a barrel while US West Texas Intermediate crude (WTI) fell by $5.01 or 5.6 per cent to $84.22 per share.

Fuel demand in the world’s largest consumer, the US fell last week to about 8 million barrels per day, its lowest since the start of this year, the US Energy Information Administration (EIA) reported Wednesday.

According to analysts, some of that demand drop could be due to rains which brought flooding to New York last Friday and post-tropical storm Ophelia, which doused the Northeast with torrential downpours in late September.

The EIA reported that inventories had shed 2.2 million barrels in the week to September 29 compared with a draw of the same size estimated for the previous week by the EIA.

Oil prices were already under pressure from high US Dollar combined with a pessimistic outlook for the global economy to pressure benchmarks.

A tight market combined with the decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to maintain its production cuts failed to counter bearish sentiment.

The OPEC+ committee said it will continue to closely assess market conditions, adding that the panel recognised and acknowledged the Saudi and Russian cuts.

Saudi Arabia also confirmed it will continue its voluntary 1 million barrels per day crude supply cut until year-end, while Russia said it will continue its 300,000 barrels per day crude export cuts, and in November will review its voluntary 500,000 barrels per day output cut set in April.

Russian Deputy Prime Minister Alexander Novak said the Saudi and Russian cuts have helped to balance oil markets, and said the domestic market benefited from the Kremlin’s diesel and gasoline export ban.

The downward pressure on prices, which began last week with profit-taking from institutional investors, appears to have built some serious momentum.

Economic news also pressured oil prices as growth in the US services sector slowed in September, data showed.

According to the US Institute for Supply Management (ISM), its non-manufacturing PMI slipped to 53.6 last month from 54.5 in August. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy. It was in line with economists’ expectations.

The demand for services is being underpinned by a shift in spending away from goods amid higher interest rates.

Economy

Nigeria Led Africa’s Upstream Oil, Gas Investments in 2024

Published

14 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.

The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.

According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.

Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.

Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.

Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.

Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.

In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.

Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.

Economy

UBN Property Triggers 0.22% Loss at NASD OTC Exchange

Published

17 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.

It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.

However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.

The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.

At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.

Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.

Economy

Naira Weakens to N1,550/$1 at Official Market, Gains N5 at Black Market

Published

18 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.

Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.

Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.

According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.

Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.

However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.

As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.

Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.

Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.

Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.

Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.