Oil
Brent holds steady
WASHINGTON – Brent futures held above $109 a barrel on Wednesday, drawing support from data showing a steep fall in crude stockpiles at the delivery point for the US benchmark, while weak US economic indicators overnight kept any gains in check.
Investors are assessing the demand outlook for oil when the severe chill over the US and Europe eases and as refiners take plants down for maintenance after meeting peak winter consumption, weighing on crude demand.
But prices, particularly of the European benchmark, may draw support from prolonged unrest in North African exporter Libya.
Brent crude had slipped 1 cent to $109.50 a barrel early on Wednesday, after settling $1.13 lower. US oil was unchanged at $101.83, after ending 99 cents down.
“The stocks decrease in Cushing is supporting oil, but we can see some profit-taking coming in because of the recent gains in prices,” said Ken Hasegawa, commodity sales manager at Newedge Japan. “Brent is essentially tracking the US benchmark because there are no drivers at the moment. People are looking at Libya.”
The price difference between Brent and WTI may hold around $7-$8 a barrel, Hasegawa said. The US benchmark looks set to face some downward pressure as the surge in heating oil demand eases, with prices facing strong support at $100 a barrel.
Brent may swing between $107 and $112 in the absence of any key triggers, Hasegawa added.
More than 100 rockets fired in clashes between rival government-paid militia have knocked out a power plant in southern Libya, in yet another indication of the struggle the government is facing in controlling the unrest.
US crude stockpiles at the Cushing, Oklahoma, delivery hub fell by 1.1 million barrels, data from industry group the American Petroleum Institute (API) showed, even though overall inventories rose 822,000 barrels.
The gain in the overall stockpiles was lower than analyst expectations for an increase of 1.2 million barrels.
Gasoline stocks fell by 314,000 barrels, compared with expectations in a Reuters poll for a 1-million-barrel decline. Distillate fuels stockpiles, which include diesel and heating oil, fell 693,000 barrels, compared with expectations for a 1.2 million-barrel drop, the API data showed.
Investors are now waiting for data from the US Department of Energy’s Energy Information Administration to get a clearer picture on the country’s oil stockpile.
US home price gains slowed in December, underscoring a loss of momentum in the housing recovery, while consumer confidence drifted lower this month. But the weakness in the housing sector may have been in part due to the bitter cold and severe snowstorms.
“Some US data is good and some is bad,” Hasegawa said. “But the overall outlook for the US economy is improving and there seems to be a recovery, which is good for oil.”
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Oil
FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry
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.
Business
Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative
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.
Oil
ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations
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.