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BRENT WTI MOVE UP ON PROMISE OF US-CHINA TRADE TALKS

BRENT WTI MOVE UP ON PROMISE OF US-CHINA TRADE TALKS

06 September 2019

Brent Oil Futures was up 0.13% at $61.03 a barrel, as of 12:40AM ET (04:40 GMT), while Crude Oil WTI Futures was up 0.12% at $56.37 a barrel. The EIA...

PRAISE SINGERS  GO TO "GREET" NEW  GMD NNPC

PRAISE SINGERS GO TO "GREET" NEW GMD NNPC

04 August 2019

If journalism is to have meaning, to fulfill its raison d'etre, then it must be about speaking truth to power; giving a voice to the voiceless. The National Chairman of...

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

31 July 2019

The Nigeria Gas Flare Commercialisation Programme (NGFCP) is a prime example of a project well concieved but poorly executed and unlikely to achieve most of its objectives despite its inherernt...

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

05 June 2019

First, a health warning. This article is about recalcitrant, inept and quite possibly corrupt Nigerian politicians and government ministers. It is certainly about incompetence and misconduct in public office. It...

DISASTER AS UNEMPLOYMENT LEAPS BY 30%  TO 20.9m

DISASTER AS UNEMPLOYMENT LEAPS BY 30% TO 20.9m

29 May 2019

Nigeria is sleepwalking into a disaster which has the potential to unleash instability, insecurity and crippling hardship. Unemployment is always a cause for concern, it is the clearest indication that...

 NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

08 May 2019

Working on the assumption that the Minister of Labour and Employment, Senator Chris Ngige has not been misquoted it is difficult to understand his recent pronouncement and what now seems...

NIGERIA ANOTHER MOU ANOTHER DAY

NIGERIA ANOTHER MOU ANOTHER DAY

01 May 2019

Nigeria has announced ambitious plans to double its oil production by 2025, targetting 4 million bpd in six years’ . Maikanti Baru, Group Managing Director at the Nigerian National Petroleum...

NNPC REFINERY WOES 2019

NNPC REFINERY WOES 2019

24 April 2019

The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has not unpredictably, stated that Nigeria’s continuous subsidy of petrol consumption means the Nigerian National Petroleum Corporation (NNPC) will...

NIGERIA OPEC STAND FIRM

NIGERIA OPEC STAND FIRM

28 March 2019

Nigeria and other member countries of the Organisation of Petroleum Exporting Countries (OPEC) as well as their non-OPEC allies led by the Russian Federation have said they are committed to...

PALM OIL PRODUCTION UNDERPERFORMS

PALM OIL PRODUCTION UNDERPERFORMS

18 March 2019

PALM OIL PRODUCTION A MEAGRE PERFORMANCE Nigeria from gaining a substantial share of the global oil palm industry now worth $62 billion annually, casting doubts on government’s ability to grow...

NIGERIA REFINING THE VISION

NIGERIA REFINING THE VISION

18 March 2019

NIGERIA REFINING THE VISION Nigeria is the only OPEC member country that imports gasoline (PMS) and holds the dubious distinction of being the largest importer in the world. The Nigerian...

IS THE PGB FATALLY FLAWED?

IS THE PGB FATALLY FLAWED?

18 March 2019

IS THE PIGB FATALLY FLAWED? Ten years after the Petroleum Industry Bill began its tortuous odyssey which has included the Bill being broken into four portions, both houses of the...

CBN PUMP UP THE T-BILLS

CBN PUMP UP THE T-BILLS

18 March 2019

CBN PUMP UP THE T-BILLS The Central Bank of Nigeria (CBN) plans to raise a total of N1.809 trillion from the debt market, in the first quarter of 2019.This is...

TIN EXPORTS NIGERIA

TIN EXPORTS NIGERIA

17 March 2019

TIN EXPORT NIGERIA Synterra are able to export high grade tin ore from Nigeria. We agregate the Mining production of a number of artisanal miners and consolidate volumes for exportSynterra...

BERYLLIUM MINING OPPORTUNITIES

BERYLLIUM MINING OPPORTUNITIES

17 March 2019

The Nigeria Solid Mineral and Mining Sector has in effect made the great leap forward which will now allow investors to take advantage of the vast mineral potential Nigeria possess....

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Monday, 18 March 2019 00:09

NIGERIA TIME TO HEDGE CRUDE OIL

Written by Femi Ogunkolati

TIME TO HEDGE OIL PRODUCTION

Following the longest consistent bear market and losing streak since 1984 the Dated Brent benchmark plummeted from a height of $86.74 per barrel in early October a 4 year high to $60.21 per barrel a lost of 30% of its value or just under $25 a barrel . Unlike many experts who predicted a bull market that would see the Dated Brent break the $100 barrier, this analyst rightly predicted the intervention of US foreign policy and the newest element of fundamental analysis of the oil markets, "The Trump Tweet". Market Analysts and traders have had to contend with imponderable inventory reports emanating from the EIA jolting the market with unexpected inventory builds.

 Given its increasing frequency and its new found power to affect the market the US President's tweets have firmly established themselves as a distinct influence outside the categorisation of geopolitical events.US foreign policy is now dictating oil price volatility . Over the last 3 months key producers have been pressured into creating an oversupply in anticipation of Iranian sanctions which when they came where sanctions only in name . The impending China trade war and its effect on global oil demand destruction further enhances bearish sentiment in crude oil benchmarks. President Trump seems adament at ratchetting up the pressure on the Chinese and seems likely to increase tarrifs to 25% on over $250 billion worth of Chinese imports. The clear implication is demand destruction as global GDP slows and the call for oil eases.

 I have been a long term critic of Nigeria's unwillingness to hedge its production or at least a part of it. Indeed I have made numerous proposals to both the Nigerian National Petroleum Corporation (NNPC) and the Ministry of Petroleum Resources. I am of the opinion that the current US Administration exercise enough leverage over Saudi Arabia to influence OPEC output cuts and Trump will use that influence remorselessly. The Saudi's pumped over 11.1 million barrels a day in October, pressured by Trump in his quest to keep oil prices low. Whilst low oil prices might favour the US in particular, Nigeria needs a high oil price and certainly in excess of the USD$60 per barrel the Government has predicated its budget and flag ship Medium Term Expenditure Framework (MTEF). I find it curious that given the importance of infrastructure spending to the Nigeria economy and general debt profile, Nigeria choose not to exercise prudence in protecting its revenues.

 

Dr Ibe Kwachikwu's insistence that a benchmark price of $70 per barrel is optimum for Nigeria is confusing. If at $84 per barrel most independent economic commentators predicted a global GDP growth and an increase of 1.3m bpd global consumption then surely that is a more logical benchmark unless his statement reflects the price required to sustain investment in exploration. The last oil price collapse plunged Nigeria into recession, given Trumps crusade for low oil prices and what looks like a US -China trade war it seems the break even cost of shale production will set the bottom for the market. I can see a medium term price range for the Brent benchmark of between $55 - $60 per barrel. I think the US will be satisfied with slowly strangling Iran as long as OPEC don't cut too deep. US inventories are at record highs with daily production in October reaching 11.7 million barrels per day there will be pressure to maintain that level of production

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