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Tag: Crude oil

  • Crude oil price ‘ll rebound March 2016, don predicts

    Crude oil price ‘ll rebound March 2016, don predicts

    Oil price will rebound in March 2016, after falling for more than two years with resultant effects on Nigeria and other oil producing nations, a professor of Petroleum Resources and Policy Research, Prof Wunmi Iledare has said.

    He said the downturn in the global market would ease in the first quarter of next year, once the Organisation of Petroleum Exporting Countries (OPEC) is able to control oil supply from the Middle East, among other initiatives that are being carried out to increase the international prices of crude oil.

    What is happening to Nigeria and other oil producing countries, he said,  is not about oil price alone, but about what he described as market edge.

    He said: ‘’It is one thing to produce oil and it is another thing to sell the oil and earn good revenue. There is no doubt that the country will further experience cash crunch till March 2016, when the turnaround in the market is expected.’’

    He said Nigeria should further expect cash crunch, as the oil price may not rally up until March 2016,  arguing that the country would benefit when the price of crude rebounds.

    He said the Federal Government’s decision  to benchmark its 2016 budget at $38 per barrel, is in tandem with the realties in the global oil market where the price of oil has fallen to $35 per barrel.

    Iledare, who is the President of International Association of International Energy Economics (IAEE), Nigerian chapter, said with the price of oil falling to $50 a barrel in mid 2014,  $47 a barrel in May 2009 and now $35 a barrel, the Federal Government has no option than to further expect cash crunch.

    According to him, the government should be thinking of how to diversify its revenue base if it wants its fiscal programme vis-a-vis budget to be sustainable.

    ‘’ In the milieu, the government should be thinking of another means of funding its budget in the years ahead.  Price volatilities and instability in crude oil production are some of the major features of the market, and these directly or indirectly are affecting Nigeria, being an oil dependent nation. What Nigeria has got to do is to look for ways of turning oil and gas to finish products to up its revenue, among considering other measures that would have positive impacts on the economy,” he added.

    It would be recalled that the slump in the global price of crude oil dated back to 2012, when Brent crude rose to as high as $111.26 a barrel, up from $61 a barrel in 2009. Since then,  the market has been witnessing a general slump in the prices of crude oil, a development that has affected exploration and production activities in Nigeria, whose oil is the main stay of its economy.

  • Forte Oil rallies stock market on crude oil contract

    Forte Oil rallies stock market on crude oil contract

    Forte Oil Plc led a break-even rally at the Nigerian stock market yesterday as the petroleum company announced that it had been awarded contract to lift crude oil by the Federal Government of Nigeria.

    Forte Oil’s share price rose by N12.10 to close at N254.10, representing an increase of 5.0 per cent. In a statement, Forte Oil stated that it was awarded the crude oil lifting contract by the Nigerian National Petroleum Corporation (NNPC) after it bid successfully scaled through the tender by the national oil corporation.

    Forte Oil’s announcement reverberated in the oil and gas sector. Another oil major, Total Nigeria recorded the second highest gain, in value terms, with a gain of N7.20 to close at N152.20, representing an increase of 4.97 per cent. Oando, another oil major, rose by 25 kobo or 4.80 per cent to close at N5.46 per share.

    The gains by the oil majors pushed the NSE Oil and Gas Index to the top with above average gain of 3.0 per cent.  The NSE Insurance Index rose by 0.8 per cent. The NSE Industrial Goods Index appreciated by 0.3 per cent while the NSE Banking Index improved by 0.1 per cent.

    The average benchmark index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), rallied on the back of the gains by the oil majors to close with a modest gain of 0.02 per cent, its first increase in four trading sessions. The ASI rose from 26,948.43 points to close at 26,953.05 points. This moderated the average year-to-date return to -22.23 per cent.

    Aggregate market value of all quoted equities also rose marginally from N9.265 trillion to close at N9.267 trillion. With 29 gainers to 12 losers, the market performance was driven by both widespread bargain-hunting and improved appetite for large-cap stocks.

    Other top gainers included Unilever Nigeria, which rose by N1.45 to close at N45.50; Okomu Oil Palm added N1.34 to close at N28.34 and Lafarge Africa, which rose by N1.10 to close at N92.44 per share. Champion Breweries was the most active stock with a turnover of 36.72 million shares worth N128.89 million in six deals.

    On the other hand, Mobil Oil Nigeria led the losers with a loss of N6.57 to close at N125.84. Nigerian Breweries followed with a loss of N2.23 to close at N118.79. UAC of Nigeria dropped by N1.07 to close at N20.43. Dangote Cement declined by N1.05 to close at N155.05 while Union Bank of Nigeria dropped by 29 kobo to close at N5.70 per share.

  • Crude oil price ‘ll rebound March 2016, don predicts

    Crude oil price ‘ll rebound March 2016, don predicts

    Oil price will rebound in March 2016, after falling for more than two years with resultant effects on Nigeria and other oil producing nations, a professor of Petroleum Resources and Policy Research, Prof Wunmi Iledare has said.

    He said the downturn in the global market would ease in the first quarter of next year, once the Organisation of Petroleum Exporting Countries (OPEC) is able to control oil supply from the Middle East, among other initiatives that are being carried out to increase the international prices of crude oil.

    What is happening to Nigeria and other oil producing countries, he said,  is not about oil price alone, but about what he described as market edge.

    He said: ‘’It is one thing to produce oil and it is another thing to sell the oil and earn good revenue. There is no doubt that the country will further experience cash crunch till March 2016, when the turnaround in the market is expected.’’

    He said Nigeria should further expect cash crunch, as the oil price may not rally up until March 2016,  arguing that the country would benefit when the price of crude rebounds.

    He said the Federal Government’s decision  to benchmark its 2016 budget at $38 per barrel, is in tandem with the realties in the global oil market where the price of oil has fallen to $35 per barrel.

    Iledare, who is the President of International Association of International Energy Economics (IAEE), Nigerian chapter, said with the price of oil falling to $50 a barrel in mid 2014,  $47 a barrel in May 2009 and now $35 a barrel, the Federal Government has no option than to further expect cash crunch.

    According to him, the government should be thinking of how to diversify its revenue base if it wants its fiscal programme vis-a-vis budget to be sustainable.

    ‘’ In the milieu, the government should be thinking of another means of funding its budget in the years ahead.  Price volatilities and instability in crude oil production are some of the major features of the market, and these directly or indirectly are affecting Nigeria, being an oil dependent nation. What Nigeria has got to do is to look for ways of turning oil and gas to finish products to up its revenue, among considering other measures that would have positive impacts on the economy,” he added.

    It would be recalled that the slump in the global price of crude oil dated back to 2012, when Brent crude rose to as high as $111.26 a barrel, up from $61 a barrel in 2009. Since then,  the market has been witnessing a general slump in the prices of crude oil, a development that has affected exploration and production activities in Nigeria, whose oil is the main stay of its economy.

  • Equities slump to 37-month low amidst crude oil decline

    Nigerian equities slumped below its three-year low yesterday as global decline in crude oil price exacerbated concerns over Nigeria’s fiscal and macroeconomic outlook. After a loss of 1.08 per cent or N104 billion on Tuesday, quoted equities dropped by 1.92 per cent or N 181 billion on Wednesday as investors reacted sharply to similar decline in crude oil price.

    The average decline at the Nigerian stock market yesterday correlated with 1.95 per cent decline in the Brent Crude Oil price to $43 per barrel. Crude oil incomes account for about 85 per cent of Nigeria’s national revenue. Nigeria’s N6 trillion budget for 2016 was benchmarked against crude oil price of $38 per barrel.

    “OPEC’s decision to abandon its production quota which has led to a further decline in oil prices, seems to have fuelled the renewed sell pressure on the Nigerian Bourse,” said Afrinvest Securities- a Lagos-based dealer at the Nigerian Stock Exchange (NSE).

    Aggregate market value of all quoted equities on the NSE slumped from N9.466 trillion to close at N9.285 trillion, representing a loss of N181 billion. The All Share Index (ASI)-the value-based common index that tracks prices of all quoted companies, also dipped by 1.92 per cent from 27,533.03 points to close at 27,004.50 points, its lowest point in the past 37 months.

    The successive decline built up the negative average year-to-date return at the stock market to -22.08 per cent. With 24 losers to 15 gainers, widespread losses across the sectors and losses within the highly capitalised stocks group. The NSE Industrial Goods Index dropped by 2.6 per cent. The NSE Consumer Goods Index declined by 0.6 per cent while the NSE Insurance Index slipped by 0.3 per cent. However, the NSE Oil & Gas Index rose by 0.9 per cent.

    Dangote Cement, the most capitalised stock at the stock market, recorded the highest loss of N8.53 to close at N162.19. Guinness Nigeria followed with a loss of N1.90 to close at N123. Nigerian Breweries, the second most capitalised stock at the market, lost 99 kobo to close at N112.01. Cadbury Nigeria declined by 98 kobo to close at N18.68. GlaxoSmithKline Consumer Nigeria lost 66 kobo to close at N36. PZ Cussons Nigeria dipped by 50 kobo to close at N26.50. Guaranty Trust Bank lost 37 kobo to close at N18.53. Zenith Bank declined by 35 kobo to close at N14 while Ecobank Transnational Incorporated and Fidson Healthcare lost 14 kobo each to close at N16 and N2.69 respectively.

    Afrinvest Securities stated that the downtrend reflected the waning investors’ appetites consequent on the ongoing decline in crude oil prices that has sparked concerns on Nigeria’s fiscal viability and macroeconomic fundamentals.

    “As outlook for the oil market remains bearish, strong policy responses from fiscal and monetary mangers to adjust to the reality of a lower oil revenue environment are medium term factors that could lead to an improvement in sentiments. In the interim, our short term outlook for the market remains bearish although we anticipate that bargain hunting might result in a mild uptrend in the trading session ahead,” analysts at Afrinvest Securities stated.

    Total turnover stood at 240.8 million shares valued at N2.41 billion in 3,073 deals. Zenith Bank was the most active stock with a turnover of 64.3 million shares worth N856.04 million in 590 deals.

  • ‘China’s crude oil importation from Nigeria steady’

    chinese Ambassador to Nigeria Gu Kiaojie has said his country’s crude oil importation from Nigeria has been steady in the last five years.

    Gu told the News Agency of Nigeria (NAN) that contrary to insinuations, “China’s oil import from Nigeria remains steady”.

    “For the past four to five years China has never reduced the volume of crude oil importation from Nigeria, the volume remains stable,” he stressed.

    The Chinese envoy, who described the current trend in the crude oil market as a global phenomenon, said the global oil market was weak.

    He blamed the trend on weak global economy and the market forces of demand and supply, though he admitted that China was not a major crude oil importer in the world.

    “China steadly purchases between two to three per cent of total global Nigerian crude oil export”

    He advised Nigerians to redouble their efforts in looking inward and see what they can produce locally rather than relying on importation.

    Besides crude, Gu also said China imports commodities as iron ore, soya beans from Nigeria on a regular basis.

  • Crude oil a pain to economy, says NEXIM boss

    Crude oil a pain to economy, says NEXIM boss

    The discovery of crude oil has been described as a great pain on Nigeria’s economy, the Managing Director/CEO of Nigeria Export-Import Bank (NEXIM), Robert Orya, has said.

    Orya, who spoke over the weekend in Abuja at a forum tagged, ‘Business Talk In Summer’ organised by an Abuja based radio station- Cool Wazobia FM, said whereas other oil producing nations make good use of their oil proceeds to diversify their economy, Nigeria uses its oil proceed to kill other thriving sectors of the economy.

    He lamented that the agriculture sector with all its potentials to transform Nigeria economically, has been neglected because of the existence of cheap monies from the sale of crude oil.

    Orya warned that Nigeria will find itself in a fix should her oil dry up. The NEXIM bank boss noted that, Nigeria, essentially is an agrarian economy with oil producing capabilities has turned a lazy country because of cheap income from oil sources.

    He said: “Prior to rebasing of Nigeria’s economy in 2014, Agriculture contributed over 40 per cent of GDP, but with the rebasing, the Agric Sector now accounts for about 20 per cent, not because of lower productivity, but because other emerging sectors have diluted the contribution of Agriculture”.

    He stated that despite the fact that 93 per cent of our revenue comes from oil, it is an area that we should have used what we are getting from there to develop the non-oil sector.

    “It is the non-oil sector that determines the rate of our economic growth and not oil. If we had used that money to develop agriculture, agro-processing and to developed solid minerals, Nigeria will not have the magnitude of challenges it has today.”

    To address some of the problems militating against development of agriculture sector, Orya advocated the promotion of private investments through suitable incentive measures, like tax holidays and other fiscal measures to encourage investment in agriculture.

  • NNPC lifts embargo on 113 crude oil vessels

    NNPC lifts embargo on 113 crude oil vessels

    The Nigerian National Petroleum Corporation, (NNPC) yesterday lifted the embargo it placed on some 113 Vessels from engaging in  Crude Oil/Gas loading activities in any of the Terminals within the Nigerian Territorial waters.

    The Corporation said lifting the ban is predicated on  the receipt of Letters of Comfort from all Terminal Operators, oil companies and Off-takers of Nigerian Oil and Gas as guarantee that nominated vessels, pending the outcome of detailed investigation, are unencumbered and would not be utilised for any illegal activity whatsoever.

    NNPC’s Group General Manager, Group Public Affairs Division, Ohi Alegbe, who made this known in a statement, said the Federal Government has approved the establishment of an Inter-Agency Committee made up of the Department of State Services, Nigerian Maritime Administration and Safety Agency, Nigerian Navy, Department of Petroleum Resources and the NNPC.

    The body is mandated to collect data and investigate the activities of the banned vessels within Nigerian territorial waters. In addition, it is expected to appraise the culpability or otherwise of each of the vessels in the time past and advise appropriately, the statement said.

  • NNPC nullifies supply of crude oil to refinery contract

    NNPC nullifies supply of crude oil to refinery contract

    The Nigerian National Petroleum Corporation (NNPC) Wednesday announced new measures aimed at cost reduction and strengthening of operational efficiency across its value chain.

    The NNPC in a release stated that after proper evaluation and in line with the terms of contract for the delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna, the Corporation has cancelled the current contract due to exorbitant cost and inappropriate process of engagement.

    The Corporation noted that as a stop-gap measure, NIDAS Marine Limited, a subsidiary of the NNPC has been engaged to provide crude delivery service on negotiated industry standard rate pending the establishment of substantive contract.

    A statement of the Group General Manager, Group Public Affairs Division, Mr. Ohi Alegbe that made this disclosure quoted the corporation as saying “We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna Refineries pending the restoration of the Crude Pipeline infrastructure.”

    The NNPC explained that it resorted to the delivery of crude oil to the refineries by marine vessels following incessant attacks on the Bonny-Port Harcourt refinery pipeline and the Escravos crude pipelines by vandals and oil thieves resulting in the complete unavailability of the pipelines in 2013.

    The Corporation also announced the termination of the Offshore Processing Agreements, OPA, entered into in January, 2015 with three companies, namely- Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd. Under the agreement NNPC allocates a total of 210, 000 barrels of crude oil per day for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.

    “However after detailed appraisal of the operation and its terms of agreement, the NNPC is convinced that the current OPA is skewed in favour of the company’s such that the value of product delivered is significantly lower than the equivalent crude oil allocated for the programme,’’ the Corporation said.

    The NNPC also observed that the structure of the agreement does not guarantee unimpeded supply of petroleum products as delivery terms were not optimal.

    To address these lapses, the NNPC informed that it has commenced the process of establishing alternative OPA based on optimum yield pattern with tender processing fees.

    “After due appraisal of performance trajectory, we have invited Messrs. Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new Offshore Processing Agreement while we have engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA,’’ the NNPC stated.

    On the status of the Crude for product exchange agreement (SWAP) reportedly entered into by the NNPC and some oil traders, the Corporation informed that the last SWAP arrangement lapsed in December, 2014 and was never renewed.

    The NNPC also informed that it has obtained the permission of President Muhammadu Buhari to kick-start the tendering process for the 2015/2016 Crude Oil Term Contract for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.

    The Corporation noted that the process which would commence with the advertisement of the Crude Oil Term contract in both National and International print media for a period of one month has been carefully structured to weed out “briefcase companies’’ and rent seekers.

  • Oil falls as Iran, China discuss more supply

    Brent crude oil fell below 58 dollars a barrel on Tuesday on signs showed that the Iranian nuclear talks could lead to the lifting of sanctions.

    The positive outcome of the talks came as Iranian officials visited Beijing to seek more oil sales, leading to speculations that there could be further oil glut.

    China is Iran’s largest trade partner and had bought roughly half of its crude exports since 2012, when sanctions against the Islamic Republic were tightened.

    Oil markets were also pressured by a Goldman Sachs report saying prices needed to remain low for months to slow U.S. oil output growth.

    Brent LCOc1 was down 50 cents at 57.62 dollars a barrel while U.S. crude CLc1 was down 60 cents at 51.54 dollars a barrel.

    Global oil markets already face a supply glut with producers pumping over 1.5 million barrels per day (bpd) more than demand in the first half of this year, analysts say.

    “There is a massive oversupply, stocks are rising and now we have the prospect of more Iranian oil coming onto the market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.

    Goldman said in a research note it expected U.S. crude inventories to top out in April and subsequently draw down at 350,000 bpd during May-September, when demand for fuel would be high.

  • Stock futures higher as crude oil weakens

    UNITED States stock index futures have risen, pointing to a second straight daily gain as a trio of M&A deals lifted sentiment after a recent bout of weakness.

    Despite that, energy shares could come under pressure as crude oil fell sharply, due to a possible deal with Iran that could bring an end to sanctions and allow an increase in the country’s oil exports. Crude oil fell 1.8 percent to $47.94 per barrel.

    Separately, an increase in the U.S. dollar could weigh on multi-nationals.

    Both the dollar and commodity prices have given investors reason to be cautious of late, especially going into the first-quarter earnings season, where traders will look to see how much oil prices and the strong U.S. dollar will impact corporate bottom lines. Last week, the S&P 500 fell 2.2 percent, the Dow lost 2.3 percent and the Nasdaq declined 2.7 percent.

    In deal news, OptumRx Corp, a unit of UnitedHealth Group, agreed to buy pharmacy benefit manager Catamaran Corp in a deal worth $12.78 billion. Shares of UnitedHealth, a Dow component, rose 2.7 percent to $121.60 before the bell while U.S. shares of Catamaran added 26 percent to $60.75.

    Ireland’s Horizon Pharma Plc said it would acquire Hyperion Therapeutics Inc in an all-cash deal worth about $1.1 billion, while Fujifilm Holdings Corp agreed to acquire U.S. biotechnology firm Cellular Dynamics International Inc for $307 million.

    Hyperion rose 5.6 percent to $45.13 in light premarket trading while Cellular more than doubled in premarket and was among the most active Nasdaq stocks.

    The deals follow reports last week of Intel Corp being in talks to buy Altera Corp in a deal that could top $10 billion.

    Trading could be quiet this week as investors look ahead to earnings season, which will start in earnest in mid-April, as well as to the March payroll report, which will be released on Friday, when stock markets are closed for the Good Friday holiday, leaving investors unable to trade on the data until the following week.