Oil Price fall to $49pb as Iraq raises crude export

ITRealms:

Following an increase in Iraq’s crude exports, oil prices fell to $49 per barrel on Monday, ahead of the meeting of the Organisation of the Petroleum Exporting Countries (OPEC), scheduled for Thursday, June 2, ITRealms reports.

Oil prices are expected to edge further downward as Canadian production is set to start after huge wild fires. Attention is therefore turned to the OPEC meeting in Vienna on Thursday, which is aimed at reaching an agreement over production freeze in an effort to prop up oil prices, though most analysts do not expect any changes in the group’s production.

According to Commerzbank analysts, “We do not expect any (OPEC) agreement on a specific production target to be achieved. Iraq plans to discuss freezing oil production, but Iran and Saudi Arabia are unlikely to be ready to take any such step.”

ITRealms gathered that a spike in tensions between rivals Saudi Arabia and Iran had ruined prospects of reaching a production freeze agreement at the last meeting of OPEC and non-OPEC which held in Doha, Qatar.About 18 OPEC and non-OPEC oil producers, including Russia, met in the Qatari capital of Doha to rubber-stamp a deal to freeze output at January levels until October 2016, but the meeting was postponed to June 2, after OPEC’s de facto leader, Saudi Arabia, told participants it wanted all OPEC members, including Iran, to take part in the freeze, but Iran had refused this offer, seeking to regain market share after the lifting of US sanctions against it in January this year.

Okoli Vincent/GEE

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Oil price increase as crude hits $50 per barrel

ITRealms:

For the first time this year, oil prices have risen above $50 per barrel, which is almost doubling of prices since 12 year lows in January and a return to levels seen in November last year. This happened as a result of supply disruptions and a decline in crude inventories in the United States, ITRealms reports.
Canada experienced a decline in output of about 1 million barrels a day this month, after wildfires hit production, while, militant activity in Nigeria has also reduced output by 40 per cent to 1.4 million bpd.

However, OPEC’s meeting, which is to be held on  the 2^nd of June, remains to be the key risk factor in the short term as markets are enthusiastic to know whether an agreement on a possible oil freeze will see the light.

However, analysts have said that higher prices could mean some producers increase supplies and make more expensive production methods, like shale, viable again.

According to Citibank, “The return of US oil production on the back of higher oil prices, cost deflation across the sector, and Saudi Arabia’s intentions to raise crude production and exports are headwinds to a price rally,” Last year, prices rallied from January to May before collapsing again.

Okoli Vincent/GEE


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Adeosun: Nigeria’s economic challenges are surmountable

ITRealms:

… Resists calls for IMF solution

The Finance Minister, Mrs Kemi Adeosun, has explained why the Federal Government is not excited about calls to apply for loan facility from the International Monetary Fund (IMF) to tackle some of the current economic challenges that Nigeria is facing due to the slump in global oil prices, reports ITRealms.

Adeosun gave this clarification on Friday at a Spring Meetings of the IMF/World Bank alongside other speakers including IMF Deputy Managing Director Mitsuhiro Furusawa and Rwanda Finance Minister Claver Gatete.

The Minister, who was a speaker at a panel discussion on Africa titled, “Sub-Saharan Africa: Just a Rough Patch,” said Nigeria is adapting to its new realities and it is implementing fiscal policies to steer the country back on track for stable growth with a diversified economy. 

These policies and investment should enable Nigeria to show positive growth in 2017.

Adeosun emphasised that what the country is passing through is surmountable, adding that government is already applying a cocktail of measures to address the problem.

“Nigeria is not sick and even if we are, we have our own local remedy,” the Minister said, in an apparent response to a question on why the government has refused to apply for IMF loans.

Noting that the real vulnerability in the Nigerian economy is over-dependence on a single source of revenue, oil, the Minister said, “We have resolved to build resilience into the country’s economy to hedge against future oil shocks. This is because dependence on oil brings about vulnerability and laziness. So we are doing a combination of things to diversify our economy, with revenue mobilisation to enable sufficient investment in developing the non-oil sectors.”

We have a great opportunity to reset the Nigerian economy and ensure that as we go forward, growth will be in a sustainable manner so that we won’t be vulnerable to oil price fluctuations, and with a truly diversified economy we would have enabled opportunities for wealth creation that would have trickles down to every Nigerian.

The compelling business case in Nigeria is that the fundamentals remain very strong, a teaming, young growing population, rich in resources and with a government determined to finally get it right. The great thing is that long term investors recognize this and understand the difference between short term and long term issues and the case for Nigeria persuades one to plan for the longer term opportunities.

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Pix: Finance Minister, Mrs Kemi Adeosun