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Brent oil rises above $106; premium to U.S. crude

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NEW YORK – Brent crude was above 106 dollar a barrel on Thursday as global economic growth worries hurt demand.

The oil market has mostly escaped the recent selloff in risky assets, which was sparked by emerging markets turmoil and a mixed picture on global economic growth.

“Commodities have largely been unaffected by the emerging market turmoil so far.

Industrial metals are to be affected, while the energy market is getting support from the fact that the global economy presumably is back on the right track,” said Mark Keenan.

Keenan is head of commodities research in Asia at Societe Generale.

Brent crude was trading two cents higher at 106.27 dollars per barrel, having settled up 47 cents the session before.

U.S. crude rose 14 cents to 97.64 dollars a barrel, after closing up 19 cents.

The benchmark was supported as severe snow and ice storms in the Northeastern states boosted demand for heating fuels.

U.S. stocks of distillates fell 2.4 million barrels last week – more than expected.

Inventories of the fuels on the East Coast declined to their lowest level since April 2003 due to the continued cold spell, government data showed.

“While distillate stocks normally draw at this time of the year, since the start of the year they have done so at a greater-than-normal rate and from a particularly low base level,” Harry Tchilinguirian, said in a note.

Tchilinguirian is head of commodity markets at BNP Paribas.

Still, the country-wide drop in distillates should more be attributed to a rise in exports and a weekly decline in production than to cold weather, Tchilinguirian said.

Demand for jet fuel, however, could be hit with 2,880 flights cancelled on Wednesday throughout the U.S.

Oil markets were also supported by a pickup in the U.S. services sector in January, with steady strength in private-sector hiring.

Crude stocks at Cushing fell 1.6 million barrels to 40.3 million barrels last week, reflecting the start-up last month of TransCanada Corp’s 700,000 barrel-per-day Gulf Coast pipeline.

It had been expected to ease a glut at the Oklahoma storage hub.

Support for U.S. crude narrowed the gap to the international benchmark to 8.63 dollars per barrel on Thursday.

The spread touched 7.94 dollars per barrel on Wednesday, the narrowest since October 10, before closing at 8.87 dollars per barrel.

The narrowing gap comes as many investors have pulled out of heavy speculation in the spread.

“We have seen a clear step back from the speculative community, including hedge funds, simply because they lost so much money on trading the spread.

“As a result, the spread is now more driven by fundamental factors, and this will keep volatility in the spread lower,” said Keenan, who expects the spread to narrow further.

“When you see a big increase in bets on either side of the current price, that usually suggests that the market will stay range bound.”

– REUTERS

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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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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.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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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.

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ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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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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