Oil
U.S. Oil Prices Climb Slightly Ahead of Fed Meeting
NEW YORK – U.S. oil futures edged slightly higher Tuesday as traders were cautious ahead of the start of a two-day Federal Reserve policy meeting, which could offer a timetable for the wind down of its key economic stimulus program, a measure that has helped prop up crude prices.
Light, sweet crude for January delivery rose 10 cents, or 0.1%, to $97.58 a barrel on the New York Mercantile Exchange. Prices have finished higher in nine of the past 12 trading sessions.
Many market participants expect the Fed to begin scaling back its so-called quantitative easing program, in which it buys $85 billion each month in mortgage-backed securities and longer-term Treasury bonds, in the near future. The program has boosted oil prices by weakening the dollar, making crude cheaper to buy with other currencies.
With a series of recent, stronger-than-expected reports on the U.S. economy, some investors say an announcement on such a reduction could come Wednesday, after the central bank’s Federal Open Market Committee concludes its meeting, while others are less certain.
“I think nobody really knows what to expect and it seems like half of the economists expect there will be an announcement [of a reduction] and there’s an equal chance it may not happen,” said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Conn.
The U.S. contract, known as West Texas Intermediate, or WTI, was lower earlier in the session, but reversed after the release of the consumer price index.
The index, which measures how much Americans pay for everything from furniture to medical care to housing, remained unchanged last month from October, the Labor Department said Tuesday. But core prices, which strip out volatile food and energy costs, rose 0.2%.
The data is important to Fed officials as they weigh when to begin reducing their easy-money policies.
“People are trading off of what that [data] might do to the Fed decision,” Mr. Armstrong said.
Traders also shifted their attention to a weekly government report on oil supplies, expected on Wednesday at 10:30 a.m. EST. Some analysts said the closely-watched data could show a third straight week of declining crude stockpiles amid higher-than-usual refiner operating capacity for this time of year.
Last Wednesday, the Energy Information Administration said oil inventories, for the week ended Dec. 6, fell by 10.6 million barrels, the largest decline in nearly a year. The steep drop though, was due to fewer crude imports and an end of year tax assessment.
Oil market investors also expect Wednesday’s report to include some bearish data on gasoline demand amid snowy weather in key regions of the country over the past week.
Meanwhile, Brent crude for February delivery on ICE Futures Europe declined 83 cents, or 0.8%, to $108.57 a barrel Tuesday, giving back some of its gains from Monday’s rally, which was fueled by news that many of Libya’s oil ports wouldn’t reopen.
Unrest in Libya has reduced the country’s oil output to roughly 250,000 barrels per day, down sharply from more than 1.5 million barrels per day it pumped last spring. The unrest has cut supplies to Europe and lifted Brent prices in recent months.
Front-month January reformulated gasoline blendstock, or RBOB, recently fell 0.56 cents, or 0.2%, to $2.6381 a gallon. January heating oil declined 1.82 cents, or 0.6%, to $2.9716 a gallon.
– WALL STREET JOURNAL
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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