Economy
Oil Prices Worsen as Lockdown Spells Doom for Demand Recovery
By Adedapo Adesanya
Oil prices extended their 5 per cent slump from Wednesday into Thursday after it plunged by more than 3 per cent as major economies in Europe renewed lockdowns to fight the second wave of the coronavirus.
Brent crude went down to $37.56 per barrel on the back of a decline of 3.99 per cent or $1.56, while the United States’ West Texas Intermediate (WTI) crude fell by $1.30 or 3.48 per cent to close at $36.09 per barrel.
Prices had reacted to the government response to the second wave of the pandemic as oil market participants remain concerned that the return of lockdowns in Europe will significantly weigh on economic recovery and fuel demand.
Two of the largest economies in Europe, Germany, and France, announced the restriction of movements, which the market was not expecting two or three weeks ago.
Many analysts did not believe that countries would resort to another nationwide curfew. However, France did, and from Friday, October 30, people will be allowed to go out only for shopping for essential items, for medical reasons, or for an hour-long exercise. The measure will last until the end of November, French President Emmanuel Macron said.
Germany, the biggest economy in Europe, is also restoring a partial lockdown, for the month of November, restricting social gatherings and closing bars and restaurants except for takeaway.
The market is also feeling the impact of Libya’s return to the game as expectations show that production will reach 1 million barrels per day in the next few weeks, doubling from levels earlier this month.
The opening of two key oil terminals – Ras Lanuf and Es Sider following last week’s ceasefire agreement allowed the country to ramp up production to above 500,000 barrels per day.
These latest developments mean the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) has some tough decisions to make on the path forward for its output curbs next month.
OPEC+ would really need to implement further production cuts, given the weak prospects for demand. The alliance is scheduled to meet on November 30 and December 1 to set policy.
It was reported that the two leaders of the OPEC+ pact, Saudi Arabia and Russia, would be inclined to favour rolling over the cut of 7.7 million barrels per day in 2021, instead of easing them by 2 million barrels per day agreed in the current OPEC+ production deal.
However, it was rumoured that Iraq, the United Arab Emirates (UAE) and Kuwait, the biggest OPEC producers behind Saudi Arabia, appear not to support a rollover of the cut of 7.7 million barrels per day because it is too deep for their economies and budget incomes to sustain.
Due to the environment, oil prices could not capitalise on the prospect of tighter short-term supply as Hurricane Zeta hits Louisiana in the US which reduced production for the day. Instead, the hurricane is forecast to weaken and the return of US production will add to existing oversupply.
Crude oil inventories in the US increased by 4.3 million barrels in the week ending October 23, the weekly report published by the US Energy Information Administration (EIA) revealed on Wednesday. Analysts estimate was for an increase of 1.2 million barrels.
By Dipo Olowookere
Transactions on the floor of the Nigerian Exchange (NGX) Limited rallied on Tuesday by 0.75 per cent after investors intensified their demand for local stocks.
It was a tough battle between the bulls and the bears during the session, but the former overcame by a whisker after the bourse recorded 29 appreciating equities and 28 depreciating equities, indicating a positive market breadth index and strong investor sentiment.
The growth posted by Customs Street yesterday could be attributed to the appetite for MTN Nigeria shares, which chalked up 10.00 per cent to settle at N256.30.
SCOA Nigeria appreciated by 9.93 per cent to N2.99, Omatek grew by 9.88 per cent to 89 Kobo, Universal Insurance rose by 8.70 per cent to 75 Kobo, and CAP gained 8.52 per cent to trade at N47.75.
Conversely, Secure Electronic Technology lost 9.88 per cent to quote at 73 Kobo, Abbey Mortgage Bank declined by 9.09 per cent to N3.30, Sunu Assurances tumbled by 8.21 per cent to N6.15, Deap Capital slumped by 7.08 per cent to N1.05, and C&I Leasing depreciated by 6.82 per cent to N4.10.
A total of 440.3 million equities valued at N12.0 billion exchanged hands in 13,087 deals compared with the 1.3 billion equities worth N17.7 billion transacted in 13,891 deals on Monday, representing a decline in the trading volume, value and number of deals by 66.79 per cent, 32.20 per cent and 5.79 per cent, respectively.
Lasaco Assurance ended the session as the most traded stock after it sold 108.1 million units valued at N338.7 million, Access Holdings traded 44.0 million units for N1.1 billion, UBA exchanged 27.9 million units worth N945.7 million, Zenith Bank transacted 26.7 million units for N1.3 billion, and Universal Insurance traded 22.7 million units valued at N16.7 million.
On Tuesday, the insurance, banking and industrial goods sectors jumped by 1.03 per cent, 0.30 per cent, and 0.03 per cent, respectively, and the consumer goods and energy counters lost 0.38 per cent and 0.36 per cent apiece.
The All-Share Index (ASI) went up yesterday by 767.63 points to 103,137.99 points from 102,370.36 points and the market capitalisation increased by N472 billion to N63.333 trillion from N62.861 trillion.
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.
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.
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