Oil prices may fall again as OPEC reviews supply cuts

A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months, it said in a statement on Sunday.

Reuters reports that an earlier draft of the statement had said the committee “reports high level of conformity and recommends six-month extension”.

But the final version said only that the committee had requested a technical group and for the OPEC Secretariat to “review the oil market conditions and revert… in April, 2017 regarding the extension of the voluntary production adjustments”.

Oil sector analysts said the lack of an immediate extension could drag on crude prices.

“The dropping of the recommendation to extend cuts in favour of technical review committee is likely to lead to a lot of disappointment and potential further liquidation of long positions by money managers that will put downward pressure on oil prices,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas in London.

It was not immediately clear why the wording had been changed, although a senior industry source said the committee lacked the legal mandate to recommend an extension.

The Organization of the Petroleum Exporting Countries and rival oil-producing nations were meeting in Kuwait to review progress with their global pact to cut supplies.

OPEC and 11 other leading producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year. The original deal was to last six months, with the possibility of a six-month extension.

“Any country has the freedom to say whether they do or they don’t support (an extension). Unless we have conformity with everybody, we cannot go ahead with the extension of the deal,” Kuwaiti Oil Minister Essam al-Marzouq said, adding that he hoped a decision would come by the end of April.

The oil ministerial committee “expressed its satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 percent conformity,” the statement said.

The December accord, aimed at supporting the oil market, has lifted crude to more than $50 a barrel. But the price gain has encouraged U.S. shale oil producers, which are not part of the pact, to boost output.

The committee said it took note that certain factors, such as low seasonal demand, refinery maintenance and rising non-OPEC supply had led to an increase in crude oil stocks. It also observed the liquidation of positions by financial players.

“However, the end of the refinery maintenance season and noticeable slowdown in U.S. stock build as well as the reduction in floating storage will support the positive efforts undertaken to achieve stability in the market,” it said.

It asked the OPEC Secretariat to review oil market conditions and come back with recommendations in April regarding an extension of the agreement.

“This reaffirms the commitment of OPEC and participating non-OPEC countries to continue to cooperate,” the statement said.

Russian Energy Minister Alexander Novak said it was too early to say whether there would be an extension, although the agreement was working well and all countries were committed to 100 percent compliance.

Olivier Jakob, of oil consultancy Petromatrix, said that with the revision of the ministerial committee’s statement, it was becoming more difficult to know who was responsible for what in OPEC.

“That is not the best option to provide clarity to the oil markets,” Jakob said.

Ellen Wald, a consultant on the global energy industry, said: “I think the market will react negatively to the lack of a clear direction on a rollover for the deal.”


Before the meeting, Iraqi Oil Minister Jabar Ali al-Luaibi told reporters there were some encouraging elements that suggested the oil market was improving, and that if all OPEC members agreed measures to help price stability, Iraq would support such steps.

“Any decisions taken unanimously by members of OPEC … Iraq will be part of the decision and will not be deviating from this,” Luaibi said.

Iraq’s oil production is running at 4.312 million bpd this month, Luaibi said, adding that his country had cut its oil exports by 187,000 bpd so far and would reach 210,000 bpd in a few days.

Compliance with the supply-cut deal was 94 percent in February among OPEC and non-OPEC oil producers combined, Russia’s Novak said.

Russia is committed to cuts of 300,000 bpd by the end of April, Novak said.

Novak said he expects global oil stockpiles to decrease in the second quarter of this year.

“The dynamics are positive here, I believe,” Novak said, adding that inventories in the United States and other industrialised countries had risen by less than in the past.

Kuwait’s oil minister said the market may return to balance by the third quarter of this year if producers comply fully with their production targets.

“More has to be done. We need to see conformity across the board. We assured ourselves and the world that we would reach our adjustment to 100 percent conformity,” Marzouq said.

Good news for Nigeria as oil price rises to $55.61

The price of Brent crude rose to $55.61 per barrel on Wednesday, up 26 cents from the previous day in what will be good news to oil dependent Nigeria.

The Nigerian government has repeatedly lamented the impact of the fall in global oil prices on its economy which is suffering from a recession. The current Muhammadu Buhari administration has pledged to diversify the economy with a focus on agriculture and solid minerals.

Nigeria was one of the oil producing OPEC members that agreed to a reduction in oil export to help bolster oil prices which have been low for over a year, going below $40 dollars a barrel. The country was, however, exempted from the slash due to not being able to meet its original quota caused by militancy in the oil producing Niger Delta region.

To ensure proper preparation for any fall in oil price, the Nigerian government projected an oil price of $42.5 per barrel in the 2017 budget.

On Wednesday, the U.S. dollar held near 14-year peaks as global yield spreads moved inexorably in its favour, while a falling yen lifted Japanese shares to a one-year top.

U.S. crude futures were up 32 cents at 53.62 dollars a barrel, while benchmark Brent crude futures added 26 cents to 55.61 dollars.

The Nikkei added 0.3 per cent in thin trade, while Australia’s main index climbed 0.6 per cent to its highest in 17 months after Wall Street racked up more records.

Japan’s government upgraded its overall assessment of the economy on Wednesday, echoing a more upbeat view from the Bank of Japan’s delivered the day before.

The dollar index, which measures it against a basket of currencies, stood at 103.100 having touched 103.65, its highest since December 2002.

The euro was a fraction firmer at 1.0413 dollars. On Wall Street, the Dow ended just 25 points shy of the magical 20,000 barrier helped by a 1.68 per cent gain in Goldman Sachs.

Stocks have been on a tear since the November 8 presidential election, with the Dow up nine per cent and the S&P 500 6 per cent on bets that President- elect Donald Trump’s plans for deregulation and infrastructure spending might boost profits and growth.

The Dow rose 0.46 per cent on Tuesday, while the S&P 500 gained 0.36 per cent and the Nasdaq0.49 per cent. Eight of the 11 major S&P sectors rose, led by a 1.23 per cent jump in the financial index.

After the bell, Nike rose 3 per cent on a strong quarterly report from the sports apparel seller.

European shares scaled 11-month highs on Tuesday as Italy’s banking index rose 2.3 per cent after the government decided to seek parliamentary approval to borrow 20 billion Euros to underwrite the stability of its banks.

Emerging markets have not been nearly as thrilled by Trump’s win, as the threat of tariffs has stirred fears of a trade war while rising U.S. yields have attracted funds away.

Benchmark 10-year U.S yields have climbed almost 80 basis points since early November to reach 2.57 per cent.

Data from the Institute for International Finance showed non-resident investors had pulled 23 billion dollars from emerging market portfolios since early October.

MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.3 per cent on Wednesday, but that followed a string of losses.

Gold held at 1,133.80 dollars an ounce as a firm U.S. dollar kept it pinned near last week’s 10-1/2-month low of 1,122.35 dollars.

Oil prices remain high as planned production cuts start to materialise

Oil prices jumped on Friday as evidence increased that producers in the Middle East were informing customers of upcoming supply cuts as part of a coordinated effort to drain a global glut.


Brent crude futures were trading at $54.11 per barrel, up nine cents from their last settlement.


US West Texas Intermediate (WTI) crude was up 18 cents at $51.08 per barrel.


Oil producers, including Kuwait, Saudi Arabia, and Abu Dhabi, who are key members of the Organization of the Petroleum Exporting Countries (OPEC), have started notifying customers.


They are telling customers that they would cut supplies from January as part of an effort by OPEC and other producers led by Russia to rein in a global fuel supply overhang and prop up prices.


“These greater projected cuts and our strong demand growth forecast lead us to forecast a normalisation in inventories and backwardation across the forward curve by next summer,” Goldman Sachs said on Friday.


‘Backwardation’ refers to trading where oil for future delivery is cheaper than that for imminent delivery.

Oil Prices Fall as OPEC Fails to Stop Excess Production

Oil prices dipped Tuesday as expectations dimmed of an OPEC agreement to reduce the cartel’s gushing of crude into the massively saturated global market by around a million barrels per day.

Prices were also hit as non-OPEC Russia confirmed it would not send a delegation to the Organisation of the Petroleum Exporting Countries’ meeting in Vienna on Wednesday.

In late morning European trading, US benchmark West Texas Intermediate for delivery in January was down 73 cents a barrel to $46.35, in what market analyst Jasper Lawler at CMC Markets called “heebie-jeebies” on the eve of the talks.

Brent North Sea crude was down 0.72 cents to $47.52.

Analysts expect further falls if OPEC fails to agree on Wednesday its first joint output cut in eight years in an effort to reduce the global glut and so lift prices.

The group’s big players — Saudi Arabia, Iran and Iraq — disagree on what size cuts each member will make, and the cartel wants non-OPEC countries like Russia to reduce production too.

Russia is currently pumping some 11 million barrels per day, a level not seen since Soviet days. Hit hard by the low price and Western sanctions, Moscow has said it is ready to freeze output but not to cut it.

While making life cheaper for consumers and businesses, two years of low prices have wreaked havoc with the public finances of OPEC member states, even in the wealthy Gulf states.

But Iraq and Iran, OPEC’s biggest producers after Saudi Arabia, on Monday continued to express objections to a proposal to cut up to 1.2 million barrels per day from October levels, Bloomberg News reported, citing an OPEC delegate.

In a 10-hour meeting, Iran said it might be ready to freeze production at about 200,000 barrels a day above its current output of around 3.975 million bpd, Bloomberg said.

Saudi Arabia hit back, saying Tehran should freeze its production at just over 3.7 million bpd — more or less its current level.

Iran has consistently said it won’t cut production until it has reached pre-sanctions levels. It is also a fierce regional rival of Saudi Arabia, engaged in a proxy war in Yemen and backing different sides in Syria.

Iraq meanwhile has said it will cut output but that it is short of money needed to fight Islamic State extremists. It also disputes with OPEC the level of its current output.

OPEC kingpin Saudi Arabia added to the pessimism about prospects for a deal on Sunday by appearing to say it could live without an agreement.

Recovering demand, said Energy Minister Khaled al-Falih — due in Vienna later Tuesday — would “stabilise” prices in 2017 anyway.

Prices had made a slight recovery Monday after Iraqi Oil Minister Jabbar al-Luaibi sounded an upbeat note as he arrived in Vienna, saying he was “optimistic” that the 14-country group would strike an accord.

Algeria, which is trying to mediate a deal, on Monday proposed a compromise with Iran capping its production at 3.795 bpd, delegates said, according to Bloomberg.

However, there has been no indication that any such proposal will actually be accepted when the oil ministers meet on Wednesday.

Bjarne Schieldrop, chief commodities analyst at top Nordic corporate bank SEB, said that the chances of an output cut are now “very low”.

The best possible result, at this stage, was that the club would end up with a face-saving deal while “kicking the can to the next OPEC meeting in half a year’s time”, Schieldrop said.

Oil prices hit highest since October in anticipation of OPEC-led output cut.

Oil prices rose to their highest level since October on Tuesday as the market priced in an expected output cut led by producer cartel OPEC, but analysts warned that a failure to agree on a cut could lead to a deepening supply glut by early 2017.

International Brent crude oil futures rose as high as $49.63 a barrel on Tuesday, up 1.5 percent from the last settlement and the highest since Oct. 31, before dipping back to $49.22 per barrel at 0735 GMT, still up 32 cents, or 0.65 percent.

U.S. West Texas Intermediate (WTI) crude futures were up 35 cents, or 0.73 percent, at $48.59 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) is trying by Nov. 30 to bring its 14 member states and non-OPEC producer Russia to agree on a coordinated production cut to prop up the market by bringing production into line with consumption.

“With investors becoming more optimistic about OPEC reaching an agreement on production cuts, oil prices should continue to edge higher,” ANZ bank said on Tuesday.

“The single most important country in OPEC, Saudi Arabia, wants it (a production cut)… OPEC’s leadership is cognizant of the risks posed by failing to reach a deal,” RBC Capital Markets said on Tuesday in a note to clients.

“Another fall in oil prices could plunge the (Saudi) Kingdom further into the red, imperil key initiatives (e.g., Aramco IPO), and raise the prospect of higher borrowing costs,” it added.

Goldman Sachs said in a note to clients that the chances of an OPEC cut had increased as producers needed to react to eroding supply and demand fundamentals, which the bank said “have weakened sharply since OPEC announced a tentative agreement to cut production.”

Should OPEC and other producers, especially Russia, fail to agree a cutback, Goldman said it expected an oil supply surplus of 0.7 million barrels per day (bpd) for the first quarter of 2017.

Femi Otedola No Longer A Billionaire – Forbes

Nigerian businessman Femi Otedola has fallen off the billionaire cadre of entrepreneurs.

According to Forbes, Otedola who is the Chairman of Forte Oil, suffered the plunge as he lost $1.3bn following a fall in the stock price of the company.

Forbes said, “As at the close of trading on Friday, Forte Oil’s share price plunged to a one-year low of N145 ($0.44) per share, down from an all-time high of N342 ($1.1) in March this year when FORBES published its annual ranking of the world’s richest people.

“Apart from the tumble in Forte Oil’s stock price, Otedola’s fortune has also been adversely affected by a central bank devaluation of the Naira in June. In dollar terms, the devaluation in addition to Forte’s floundering share price has knocked about $1.3 billion off the value of Otedola’s fortune which was pegged at $1.8 billion in March.

Otedola is now worth only $550 million according to the FORBES’ billionaires’ database.

Oil Prices Slump 1% as OPEC’s Output Hits Eight-month High

Oil prices fell about one per cent Wednesday after the Organisation of Petroleum Exporting Countries (OPEC) reported its September oil output at eight-year highs in its monthly Oil Market Report (OMR), thus eroding optimism over the carte’s pledge to bring a global crude oil glut under control.

This is coming as energy ministers from Qatar, the United Arab Emirates, Algeria, Venezuela and Russia yesterday began informal closed-door talks with the Secretary General of OPEC, Mr. Mohammed Barkindo, in Istanbul, Turkey, as part of the coordinated efforts to rebalance the oil market.

Also, concerns that the American Petroleum Institute (API) could report the first built in United States crude oil stocks in six weeks in preliminary inventory numbers have fueled possibility of worsening the glut in the market as Reuters reported that analysts expected the US government to report that crude oil stockpiles rose 300,000 barrels last week.

Global benchmark crude oil Brent crude fell 52 cents, or one per cent, to $51.89 a barrel while the US West Texas Intermediate (WTI) crude slipped 68 cents, or 1.3 per cent, to $50.11.

However, despite the drop, Brent is still up nearly 13 per cent since OPEC announced on September 27 that the group and other major crude oil producers would agree on a sizeable output cut or freeze to reduce a global glut by November 30 when OPEC meets in Vienna.

OPEC’s latest monthly report, issued yesterday, showed an increase in its oil production in September to the highest in at least eight years and a rise in the forecast for 2017 non-OPEC supply growth.

In its monthly market report, OPEC said expected total world oil demand for 2016 was revised upward from its previous report by 10,000 bpd to 1.24 million bpd.
Next year, world oil demand is expected to increase by 1.15 million bpd, a level unchanged from OPEC’s previous report.

The group produced 33.39 million barrels per day (bpd) last month, up 220,000 bpd from August, and as much as 890,000 bpd above the new supply target.

Read More: thisdaylive

Oil Prices Bounce From Early Losses

Oil prices recovered from early losses Monday but traders moved cautiously after Russia and Saudi Arabia wrapped up a meeting on stabilising the crude market but offered no details.


President Vladimir Putin met Deputy Crown Prince Mohammed bin Salman on the sidelines of the G20 in China on Sunday and said they would work to address a global glut and overproduction that has hammered prices for the past two years.


However, they provided no information on how they would proceed, just weeks before Moscow and crude cartel OPEC meet in Algeria to discuss the crisis.


After falling sharply in early trade, Brent crude was up four cents at $46.87 at about 0650 GMT while US benchmark West Texas Intermediate was five cents down at $44.39.


Comments from Indonesian finance minister Sri Mulyani Indrawati on CNBC that she was “comfortable” with crude prices at $40-$45 a barrel, have also added pressure on the commodity. The only Asian member of OPEC, Indonesia exported $6.4 billion worth of petroleum in 2015.

Both contracts rallied three percent Friday after Putin said Russia and other producing nations should freeze output to stabilise fluctuating prices. Russia and OPEC together produce half of the world’s oil.


The previous attempt at reaching a deal in April were scuppered by OPEC member Iran’s refusal to agree to any output freeze, and there are worries about the chances of an agreement being reached in Algeria.


At this stage, markets are probably just going to take the view that it needs to see some evidence, some tangible idea on what the agreement might actually amount to before responding to it,” Ric Spooner, a chief market analyst at CMC Markets in Sydney told Bloomberg News.


We will get a lot of statements about it but probably nothing really concrete until we get to the stage of the Algiers meeting.


The oil market has been plagued by a stubborn supply glut that saw prices plunge to near 13-year lows below $30 at the start of 2016, and while it has recovered recently it is still well off highs above $100 seen in mid-2014.

Oil Prices Rise In Asia As Output Meeting Approaches

Oil prices bounced Friday, with Brent climbing back above $40, as traders digested falling US output ahead of a producers’ meeting this month to discuss a proposed output freeze.

US production fell for the 10th time in 11 weeks, to 9.0 million barrels per day in the week through April 1, the lowest level since November 2014, according to data from the US Energy Information Administration.

Commercial crude stockpiles in the world’s top oil consumer also dropped, indicating stronger demand.

At around 0720 GMT, US benchmark West Texas Intermediate for May delivery climbed $1.03, or 2.76 percent, to $38.29 and Brent crude for June was up 83 cents, or 2.10 percent, at $40.26.

Prices retreated Thursday following a five percent rally the previous day in reaction to the decline in US inventories.

But traders are setting their sights on the April 17 meeting in Doha among crude producers led by Russia and Saudi Arabia to discuss measures to stabilise prices, including an output freeze at January 2016 levels.

There have been conflicting signals on whether such an agreement would be reached.

Saudi Arabia has said it will only agree to limits if others followed suit, while Iran said it is still ramping up production after Western economic sanctions were lifted only in January.

“Unfortunately, history is against anything (concrete) coming out of the Doha meeting,” analyst David Lennox of Fat Prophets in Sydney told AFP.

“But a lot of OPEC countries are feeling great economic pain, which might give them the impetus to take some positive action in cutting production,” he said.

Credit: Guardian

Oil Prices Hit 2016 High, Rise Above $40/bl

The price of Brent crude monday rose for the sixth consecutive trading day in a row, hitting a 2016 peak of over $40 a barrel, as buyers were encouraged by talk that the Organisation of Petroleum Exporting Countries (OPEC) was targeting a higher anchor price after a sell-off that has lasted nearly two years.

The rise in oil prices coincided with comments by the President of Dangote Group, Alhaji Aliko Dangote, who advised Nigerians to stop viewing the low oil price environment as a setback, saying that the situation offers the nation an opportunity to diversify its revenue base.

Reuters reported that oil prices also got a boost from data showing a smaller-than-expected build-up in stockpiles at the Cushing, Oklahoma delivery hub for United States crude futures.

Despite the rebound in crude price, some analysts cautioned that the global crude glut remained a huge challenge.

Global crude prices have risen more than 40 per cent since hitting 12-year lows less than two months ago.

The rebound from oil price lows of around $26 a barrel has also been driven by chart-related buying and asset rotation by investors that resulted in higher allocations into commodities such as oil and metals, as well as equities.

Brent, the global benchmark crude, rose by $2.18 at $40.90 yesterday, while its session peak was $41.04, the highest since December 9, 2015. United States’ WTI crude was also up $2 at $37.92 a barrel, after hitting a two-month high and closing at $38.11.

Traders said price gains accelerated after market intelligence firm Genscape reported a smaller-than-expected rise in crude stockpiles at the Cushing, Oklahoma delivery hub.

Major OPEC producers are privately starting to talk about a new oil price equilibrium of $50, New York-based consultancy PIRA told Reuters.

The Minister of State for Petroleum, Dr. Ibe Kachikwu, said last week that as part of measures to stabilise crude oil prices, some members of the OPEC were scheduled to meet with swing producer, Russia on March 20 in Moscow to fine tune collaborative strategies.

Kachikwu said the cartel would target a new oil price equilibrium of $50 a barrel.

Credit: ThisDay

Fear Grips OPEC Over Iran’s Threat To Increase Production By 500,000bpd

Members of Organisation for Petroleum Exporting Countries, OPEC, are beginning to panic after Iran declared on Saturday that it would increase its oil export production by 500,000 barrels per day.

Since the sanction was lifted, oil prices hit their lowest since 2003 on Monday.

The United States and European Union on Saturday revoked sanctions that had cut Iran’s oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.

Despite repeated warnings and pleadings by OPEC, Iran, also a member of the Organization of the Petroleum Exporting Countries (OPEC), insisted on Sunday that it would go ahead with export increase.

Worries about Iran’s return to an already oversupplied oil market drove down Brent crude LCOc1 to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was at $28.59 by 0921 GMT, down 38 cents from its settlement on Friday.

As at Friday, January 15, OPEC’s daily basket price stood at $24.74 a barrel, and analysts still predict a drop to $10 as Iran starts pumping more oil into the market.

U.S. crude CLc1 was down 38 cents at $29.04 a barrel, not far from a 2003 low of $28.36 hit earlier in the session.
“Iranian export is coming at a very bad time,” analysts at Barclays said.

The ban cut the country off with nearly 80 million population from the global financial system, drastically reduced the exports of a major oil producer and imposed severe economic hardship on ordinary Iranians.

In retaliation, Iran wants the world to feel the hardship it suffered through the years of denial, as the country sees its recent freedom as a means of making more money and boosting the economic standard of its people through increased export.

What this means for OPEC members, is untold hardship as it is presently being experienced, with members countries already cutting down on developmental projects and continuous fall in the value of their currencies. For, instance the official value of the naira, Nigeria’s currency is presently N196.5k to one dollar but it traded at about N297 to the dollar in the parallel market.



Credit : Today.ng

Oil Prices Rebound After Falling Below $30

Oil prices rebounded in Asia Wednesday, halting a plunge that saw crude fall below $30 a barrel for the first time in more than 12 years, but analysts warned of further pressure on the commodity.

Investors have an eye on the release later in the day of US commercial crude stockpiles data, which is expected to show another increase, further exacerbating a global supply glut that has hammered the market for 18 months.

US benchmark West Texas Intermediate (WTI) for delivery in February rose 38 cents, or 1.25 percent, to $30.82 per barrel at around 0600 GMT. European benchmark Brent rose 26 cents, or 0.84 percent, to $31.12.

On Tuesday, WTI fell at one point to $29.93, a level last seen in December 2003, although it was given a lift later by a private report pointing to a drop in inventories.

However, experts warned that prices remained fragile.

“The supply and demand landscape for oil continues being bearish as prices continue to take discounts,” Daniel Ang, an analyst with Phillip Futures in Singapore said in a market commentary.

“US oil supply continues to remain strong.”

Bernard Aw, a market strategist with IG Markets Singapore said the long-term trend is for prices to fall, with the supply glut not showing any let up.

Oil-reliant OPEC member Nigeria on Tuesday called for an emergency meeting of the grouping to address collapsing prices, which have rattled world stock markets and hammered energy firms.

The Nigerian petroleum resources minister, Emmanuel Ibe Kachikwu, said he expects an extraordinary meeting of the group in “early March” to discuss the crisis.

“We did say that if it hits the $35 (per barrel level), we will begin to look (at)… an extraordinary meeting,” Kachikwu said at the Gulf Intelligence UAE Energy Forum.

Poorer members of the Organization of the Petroleum Exporting Countries have been clamouring for a cut in the high production levels in a bid to drive prices higher.

But influential OPEC members led by Saudi Arabia have rejected any such move, preferring to fight for market share against rival producers, particularly the United States.

Crude accounts for 90 percent of Nigeria’s export earnings and 70 percent of overall government revenue.

Credit: Vanguard

Oil Prices Rise After Saudi Arabia Cuts Ties With Iran

Oil prices rose Monday on Middle East supply risks after Saudi Arabia cut diplomatic ties with Iran.

At about 1230 GMT, US benchmark West Texas Intermediate for delivery in February climbed 30 cents to $37.34 a barrel.

Brent North Sea crude for February won 59 cents to stand at $37.87 a barrel compared with Thursday’s close.

Mike van Dulken, head of research at Accendo Markets, noted that “geopolitical tensions in the Middle East are adding to existing volatility in the price of oil”.

Tensions between major crude producer Iran and its Sunni Arab neighbours reached new heights Monday as the world’s biggest pumper of oil Saudi Arabia and Gulf allies cut or downgraded diplomatic ties with Tehran in a row over the execution of a Shiite cleric.

Angry exchanges following Saudi Arabia’s execution Saturday of prominent Shiite cleric and activist Sheikh Nimr al-Nimr erupted into a full-blown diplomatic crisis as Riyadh and then ally Bahrain severed their relations with Tehran.

“Oil started the new year on the mend, as… markets reacted to fears that geopolitical tensions in the Middle East may threaten the supply of oil,” said Bernard Aw, market strategist at IG Markets in Singapore.

Despite the rise, Aw said the persistent global crude oversupply would continue to weigh on prices over the longer term.

“Unless we see a convincing drop in oil output from these two nations, and the broader oil-producing community, the supply glut issue will persist, which means oil prices would remain under pressure for a longer period,” he told AFP.

The Organization of the Petroleum Exporting Countries, whose 13 members include Saudi and Iran, decided last month against cutting output levels despite a plunge in oil prices — in a bid to maintain market share faced with competition from North American shale oil output.

Credit: Vanguard

Oil Prices Rise By 3%

Oil rose as much as three per cent on Tuesday as a weak dollar lifted commodities denominated in the currency and the Organisation of Petroleum Exporting Countries raised slightly its forecast for world oil demand growth.

Violence in Yemen also boosted crude prices, raising concerns over the security of Middle East supplies.

The dollar fell on bond market gyrations, making oil and other commodities priced in the greenback more affordable to holders of the euro and other currencies, according to Reuters.

OPEC tweaked its 2015 world oil demand growth forecast to 1.18 million barrels per day, above a previous estimate of 1.17 million.

Read Morepunchng

Buhari Will Reduce Petrol Price to N40 per Litre – Former Minister of Petroleum

Former Minister of Petroleum, Prof. Tamunoemi David-West, said that Nigerians should expect sharp drop in petrol price from the current N87 to about N40 per litre, saying, “President Mohammed Buhari will reduce the fuel pump price to N40 per litre.”

In his words: “I want to assure you that by the time he takes over, petrol will be dispensed at N40 per litre. This is possible and he has the credibility to make it work.

“Buhari will build new refineries to make petroleum products available for the masses. No responsible government will allow the masses to suffer.”

In a telephone interview with Vanguard, the former minister argued that Nigeria produces millions of barrels of crude oil daily, and if properly harnessed will boost the performance of the industry.

He noted that the president-elect is familiar with the petroleum industry, adding that he is a straight forward person that has respect for democratic principles.

“As military head of state, he dealt with the Federal Executive Council with the tenets of democracy.

“He will strengthen the refineries within a year. It is possible as we won’t spend any amount in setting up a green field refinery. We already have a blueprint as we shall use what we have to get what we want,” he added. He further stated that on many occasions, the president – elect had disclosed that the subsidy initiative is a fraud which has distorted the progress expected in the sector.

He is also said to have frowned at the spate of corruption, which has characterised the subsidy regime to include the Trillions of Naira spent on both Petrol and Kerosene subsidy within the past few years, thus inhibiting efforts to properly carry-out the Turn Around Maintenance TAM, for the refineries. He added that on countless occasions, he had argued that the country is forced to pay for scam carried out by oil cartel.

Oil Might Never Return To $100 – Saudi Prince

The days of $100 oil prices may be gone forever.
At least that’s what Saudi Prince Alwaleed believes about oil, which plunged below $46 a barrel on Monday for the first time since March 2009.

The well-known billionaire investor recently told USA Today he’s positive we’re “never” going to see $100-a-barrel oil prices again.

“There’s less demand, and there’s oversupply. And both are recipes for a crash in oil. And that’s what happened. It’s a no-brainer,” Alwaleed told the paper.

The comments from the prince mirror ones by Ali al-Naimi, the Saudi oil minister who said $100 oil may be
a thing of the past in December.

Cheap gas here to stay? If those predictions are accurate, it could also mean gas in the U.S. might not go above $3 again. Thanks to the oil meltdown, the national average price of gas has plunged to $2.13, compared with $3.31 a year ago, according to AAA.

Back in 2008, oil broke through the $100 level for the first time, leading some to predict prices would spike to $200 due to surging demand from China and India. Then oil plummeted to $34 during the Great Recession before rebounding sharply.

Crude bounced between $90 and $110 over the past three years, trading above $100 as recently as late July. But that’s when prices collapsed under the weight of a supply glut caused by North American production, including U.S. shale companies that need higher prices to be profitable.

Related: Big Oil loses $200B from oil crash

Shale is feeling the pain: Alwaleed said one “positive side effect” of the oil crash is it will allow Saudi Arabia to see “how many shale oil production companies run out of business.”

Already, U.S. energy companies have dialed back their spending plans, cut dividends and laid off workers. Analysts believe some shale companies won’t survive the drop in prices.

Now there are signs shale companies are cutting back on drilling. During the first week of 2015, oil companies reduced horizontal drilling for oil for the first time in the Bakken, Eagle Ford and Permian shale plays, according to Rystad Energy.

“‘Rigs that count’ have been resilient until now, but now these rigs are also being idled,” said Per Magnus Nysveen, head of analysis at Rystad.

Now what? Investors continue to guess where oil is going next. After showing signs of stabilization last week, oil tumbled another 4% on Monday to $45.90. Some oil watchers believe prices could plunge as low as $30 due to oversupply and sluggish demand.

Goldman Sachs said on Monday oil may need to trade near $40 a barrel for most of the first half of 2015. That would keep capital on the sidelines and slow down supply growth to rebalance the global oil market, the bank said.

Once oil finds a bottom, Moody’s senior economist Chris Lafakis thinks the black stuff could surge all the way back to $80 by the end of the year.

Alwaleed concedes a rebound may happen eventually. He just doesn’t think it’ll carry oil all the way back to $100.

Vladmir Putin Tells Russian Citizens : “Brace Up Hard Times Are Coming”

President Vladimir Putin of Russia has warned his citizens of hard times ahead and urged self-reliance. He said this in his annual state-of-the nation address to parliament. BBCcovered the event:

Russia has been hit hard by falling oil prices and by Western sanctions imposed in response to its interventions in the crisis in neighbouring Ukraine.

The rouble, once a symbol of stability under Mr Putin, suffered its biggest one-day decline since 1998 on Monday.

The government has warned that Russia will fall into recession next year.

Speaking to both chambers in the Kremlin, Mr Putin also accused Western governments of seeking to raise a new “iron curtain” around Russia.

He expressed no regrets for annexing Ukraine’s Crimea peninsula, saying the territory had a “sacred meaning” for Russia.

He insisted the “tragedy” in Ukraine’s south-east had proved that Russian policy had been right but said Russia would respect its neighbour as a brotherly country.


Source – BBC