Budget: FG maintains oil bench mark, disregards increase in oil price

#TrackNigeria Minister of State for Budget and National Planning, Mr Clem Agba says Federal government would maintain its bench mark of 60 dollars per barrel in spite of the sudden increase in price of crude oil.

Agba said this while fielding questions from journalists at a media briefing for the 25th Nigerian Economic Summit in Abuja on Monday.

Oil prices rose as much as 20 per cent to above 71 dollar per barrel, the biggest percentage spike in almost three decade as markets reopened after an attack on Saudi Arabia’s oil infrastructure that cut more than half of the country’s production.

The minister said government would be monitoring the situation to decide the next line of action.

He said if the current rise in price of crude oil is sustained then there might be need for adjustment otherwise government had no such plan.

“Considering the recent event in Saudi Arabia, leading to soaring oil price, we  will still maintain our bench mark rate in the 2020 budget proposal,” he said.

The reported strike by 10 drones at Saudi Aramco’s Abqaiq and Khurais oil facilities have disrupted more than half of Saudi Arabia’s oil capacity or 5.7 million barrels per day (mbpd).

The U.S has blamed Iran for the attacks even as Yemen’s Houthi rebels claimed credit. Some oil traders have already begun to speculate if oil prices will cross the 100-dollar mark yet again. (NAN)

Oil slips toward $60 on demand worries, despite trade hopes

Oil slipped to around 60 dollars a barrel on Friday as concern about a slowdown in the global economy and oil demand outweighed hints of progress in the U.S.-China trade dispute.

The Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) both issued reports this week pointing to an oil surplus next year, despite an OPEC-led pact to cut supply that runs until March.

“Oil prices have been slipping in recent days even as stock markets have rallied and inventory data has reported large drawdowns,” said Craig Erlam of OANDA.

“The IEA and others continue to downgrade forecasts for demand as global economic growth fears mount.”

Benchmark Brent crude LCOc1 was down 25 cents at 60.13 dollars a barrel by 0830 GMT, while U.S. West Texas Intermediate CLc1 was up five cents at 55.14 dollars.

Hopes of progress in the trade dispute lent support. The world’s two largest economies are preparing for a new round of talks aimed at curbing the prolonged spat and have been making conciliatory gestures, cheering investors.

“A wave of optimism is sweeping across financial markets,” said Lukman Otunuga, analyst at broker FXTM, citing “optimism over a potential breakthrough in the U.S.-China trade saga.”

Brent has traded in a range of nearly five dollars this week and is heading for its first weekly loss in five weeks.

The U.S. benchmark, similarly volatile, was on track for the first weekly drop in three weeks.

Brent is up 12 per cent in 2019, helped by a deal by OPEC and allies including Russia, an alliance known as OPEC+, to cut output by 1.2 million barrels per day.

The producers are trying to stop inventories from building up and, in a sign the plan is bearing fruit, U.S. crude oil stocks fell last week to the lowest in nearly a year.

An OPEC+ monitoring committee met this week and secured pledges from OPEC members, Nigeria and Iraq to deliver their share of the cut, something they have failed to do so far, but made no progress on possibly deepening the supply cut.

Some OPEC delegates say the idea of a larger cut for next year is gaining support. But Saudi Arabia’s new energy minister said talks on that issue would be left until the next OPEC+ meeting in December. (Reuters/NAN)

OPEC lauds Nigeria’s commitment to oil market stability

#TrackNigeria The Organisation of the Petroleum Exporting Countries (OPEC) has commended Nigeria’s unwavering commitment to the stability of the global oil market which spanned many years of its membership of the organization.

This commendation came from the Chairman of OPEC’s 16th Joint Ministerial Monitoring Committee (JMMC), Prince Abdulaziz Bin Salman, in Abu Dhabi, United Arab Emirates, Thursday.

Bin Salman, who doubles as the Saudi Arabian Energy Minister noted that since the 1980s when Nigeria’s late Oil Minister Dr. Rilwanu Lukman reigned at the helm of the Organisation, the West African nation’s role has been very pivotal in helping OPEC achieve stability in the oil market.

“Nigeria has always brought commitment and obligation towards the OPEC cause. I always thought of how we would have crossed the uncertainties of the global oil market of the 1980s without Nigeria,” Bin Salman added.

According to him, Nigeria’s role cuts across compliance with OPEC charters as well as mediation and reconciliation among member countries over the years.

During Thursday’s JMMC, OPEC reiterated its determination to accelerate concerted action towards addressing market challenges and adapting to future developments.

While enjoining non-compliant members to fully observe their production commitments, the JMMC also underscored the need for continued commitment for the Declaration of Cooperation (DoC) in support of oil market stability on a sustainable basis.

Earlier in his remarks, Minister of State for Petroleum Resources, Chief Timipreye Sylva said OPEC’s endorsement was a testimony to Mr. President’s efforts at ensuring that Nigeria remains a stabilizing force within the organization.

“The rest of OPEC have always looked up to us whenever there are problems. Recall that as OPEC Secretary General, our late Oil Minister Dr. Rilwanu Lukman was highly influential and since then we have played a central role and have been taken very seriously by member countries,” he stated.

Sylva, who was in his maiden outing at the OPEC described the endorsement as “heartwarming”, adding that it would go a long way to spurring and encouraging the country to do better.

The Minister further assured Nigeria’s commitment to meet its agreed quotas by October this year.

“We have agreed to comply with production cuts of 50% this month (September 2019) and 100% from October this year,” Sylva stated.

The next meeting of the JMMC comes up on the 4th December 2019 at the OPEC Secretariat in Vienna, Austria.

OPEC scribe lauds ongoing reforms in NNPC

The Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Mohammed Sanusi Barkindo, has commended the Nigerian National Petroleum Corporation (NNPC) for its ongoing reforms aimed at changing the fortunes of the corporation for the better.

Barkindo made the commendation on Tuesday shortly after inspecting the NNPC Pavilion at the ongoing 24th World Energy Congress in Abu Dhabi, United Arab Emirates.

The OPEC scribe said he was glad to see the corporation’s Management pursue the dreams of its founding fathers despite the challenges of contraction in investment that have affected the global Energy Industry. 

“I am glad that you continue to match on with your projects despite the downturn in the Industry. We have seen the Industry globally suffered in terms of contraction in investment which affected capacity. You have not only been able to stay on course, but you  also continue with these projects which are critical for the development of the corporation and the Industry in Nigeria”, Barkindo stated.

Affirming his confidence in the new leadership of the corporation, the OPEC Scribe said that the competences of the newly appointed Minister of State for Petroleum, Chief Timipreye Sylva and that of the NNPC GMD, Mallam Mele Kyari, were good match towards bringing the much-needed direction and development in the continental Oil and Gas Industry.

“I know both Timipreye Sylva as a friend and Mele Kyari as a colleague for a very long time. I had worked with both and I know that if they work together, they will make a good team that will provide the leadership that the corporation and the Industry require”, Barkindo added.

Barkindo particularly expressed his delight with the Kyari’s transparency and accountability drive, as entrenched in his Transparency, Accountability Performance Excellence (TAPE) Vision, describing it as indispensable key elements towards gaining investor confidence.

“To lead such a sensitive and capital-intensive industry like the oil and gas, you must have transparency and accountability as one of your core principles in order to drive change. I am glad I know Mele Kyari for a very long time. He is a very capable and straightforward individual with high level of integrity even as a very junior officer. So, he has a track record. I remain confident that together with his team, and with the support of government, he will accomplish the task”.

Earlier, while briefing the OPEC scribe at the event, the Chief Operating Officer Downstream, who represented the GMD at the triennial Conference, Mr. Adetunji Adeyemi, shed more light on strategic projects of the corporation and also assured Barkindo of the current NNPC leadership’s commitment to deliver on their mandate.

OPEC cuts 2020 oil demand forecast, urges effort to avert new glut

OPEC on Wednesday cut its forecast for growth in world oil demand in 2020 due to an economic slowdown, an outlook the producer group said highlighted the need for ongoing efforts to prevent a new glut of crude.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said oil demand worldwide would expand by 1.08 million barrels per day, 60,000 bpd less than previously estimated, and indicated the market would be in surplus.

The weaker outlook amid a U.S.-China trade war and Brexit could press the case for OPEC and its allies to maintain or adjust their policy of cutting output.

Iraq said ministers would on Thursday discuss whether deeper cuts were needed.

OPEC, in the report, lowered its forecast for world economic growth in 2020 to 3.1 per cent from 3.2 per cent and said next year’s increase in oil demand would be outpaced by “strong growth” in supply from rival producers such as the United States.

“This highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance,” the report said.

OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd.

The alliance, known as OPEC+, in July renewed the pact until March 2020 and a committee reviewing the pact meets on Thursday.

Oil prices LCOc1 pared an earlier gain after the report was released to sit just below 63 dollars a barrel. Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above 75 dollars, pressured by trade concerns and an economic slowdown.

The report said oil inventories in industrialized economies fell in July, a development that could ease OPEC concern over a possible glut.

Even so, stocks in July exceeded the five-year average – a yardstick OPEC watches closely – by 36 million barrels.

OPEC and its partners have been limiting supply since 2017, helping to clear a glut that built up in 2014-2016 when producers pumped at will, and revive prices.

The policy has given a sustained boost to U.S. shale and other rival supply, and the report suggests the world will need less OPEC crude next year.

Demand for OPEC crude will average 29.40 million bpd in 2020, OPEC said, down 1.2 million bpd from this year.

OPEC said its oil output in August rose, however, by 136,000 bpd to 29.74 million bpd according to figures the group collects from secondary sources.

It was the first increase this year. Saudi Arabia, Iraq and Nigeria boosted supply.

Top exporter Saudi Arabia told OPEC that the kingdom raised August output by just over 200,000 bpd to 9.789 million bpd.

Saudi Arabia continues to pump far less than its quota of 10.311 bpd.

Thanks in part to Saudi restraint, producers are still over-complying with the supply-cutting deal. Losses in Iran and Venezuela, two OPEC members facing U.S. sanctions, have widened the supply reduction.

August’s increase, however, puts OPEC output further above the 2020 demand forecast.

The report suggests there will be a 2020 supply surplus of 340,000 bpd if OPEC keeps pumping at August’s rate and other things remain equal, more than the surplus forecast in last month’s report. (Reuters/NAN)