Oil
Brent rises above $110
SINGAPORE – Brent futures rose on Wednesday, holding above $110 a barrel on renewed optimism over steady demand growth in the world’s top oil consumer the United States following healthy economic data, with supply disruption concerns providing additional support.
Orders for long-lasting U.S. manufactured goods unexpectedly rose and consumer confidence perked up, underpinning risk assets and bolstering U.S. equity markets to another record close. Some analysts see the sharp gains in shares possibly prompting more profit-taking, however, and in turn dragging down oil.
Brent crude gained 24 cents to $110.26 at 0357 GMT after ending 30 cents lower as some profits were booked following a long holiday weekend. U.S. oil gained 2 cents to $104.13 after losing 24 cents in the previous session.
“There are quite a few bullish factors in the oil market that are supportive, we have good economic indicators and uncertainty over Libya and Ukraine,” said Tetsu Emori, a commodity fund manager at Astmax Investment.
“But the U.S. equity market is too strong. My worry is if we see some profit-taking in equities, oil may fall as well.”
While the probability for a slide in oil is low, any fall triggered by investors booking profits may see Brent declining to $108.50 a barrel if the contract manages to drop past the $110 and $109 levels, Emori said.
Similarly, a strong support level for the U.S. benchmark is $101 if it slips below $103, he said.
Another record close for the S&P 500 overnight prompted Asian stocks to rise on Wednesday, with the dollar near an eight-week high against a basket of currencies.
“Oil is drawing support from factors that are outside of the oil market,” Emori said.
The overnight U.S. data is adding to gains in a market already elevated by supply disruption worries in Libya and the widening rift between Russia, the world’s top oil producer, and the West over Ukraine.
Ukrainian aircraft and paratroopers killed more than 50 pro-Moscow rebels in an assault that raged into a second day on Tuesday after a newly elected president vowed to crush the revolt in the east once and for all.
SUPPLY OUTLOOK
In Libya, a brigade from the country’s Petroleum Facilities Guard has been protesting and disrupting operations at the Hariga port to demand salary payments. The protest was interrupting work at the port, where full storage tanks have forced a stoppage of production at Sarir oilfield and a reduction at Messla oilfield.
Investors are also awaiting commercial stockpile data from the United States to gauge the country’s demand growth outlook.
U.S. commercial crude oil stocks and refined product inventories were expected to have risen in the week to May 23, a preliminary Reuters poll of five analysts showed.
The survey forecast crude oil stocks to have increased 700,000 barrels last week. The survey is taken ahead of weekly inventory reports from the American Petroleum Institute (API), an industry group, and from the U.S. Department of Energy’s Energy Information Administration (EIA).
The inventory reports are coming out a day later than normal because of the U.S. holiday on Monday.
Helping to cap gains in oil are rising exports from key Middle Eastern exporter Iraq.
Oil exports from its southern terminals are on track for a record high in May, according to loading data and industry sources. Shipments have averaged 2.60 million barrels per day (bpd) in the first 27 days of May, according to shipping data tracked by Reuters. Two industry sources, who also monitor the exports, had a similar estimate.
– REUTERS
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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