Oil
U.S. Oil Futures Tumble To More Than 5-Month Low on Supply Fears
…U.S. oil prices fall to lowest settlement since May 31
…Traders worried about growing supplies, potential Fed tapering next month
…Brent still supported by stalled Iran talks
NEW YORK -U.S. oil prices tumbled to their lowest price in more than five months amid fears over growing crude supplies, high domestic production and the possible wind down of the Federal Reserve’s economic stimulus program.
Light, sweet crude for December delivery plunged $2.10, or 2.2%, to $93.04 a barrel on the New York Mercantile Exchange, falling to the lowest level since May 31. The U.S. contract, known as West Texas Intermediate, or WTI, had hovered near $95 a barrel for more than a week prior to the steep selloff.
Since reaching its highest price in over two years on Sept. 6, U.S. prices have fallen by roughly 16%, or more than $17 a barrel.
While a closely-watched government report on U.S. crude inventories will be released on Thursday–a day later than usual due to the Veteran’s Day holiday–market participants are anticipating another build in oil stockpiles, which currently stand at 385.4 million barrels, their highest level since the end of June.
The stockpiles have climbed as U.S. production has soared to more than 20-year highs, boosted by hydraulic fracturing and horizontal drilling techniques, which have allowed energy producers to tap supplies in shale-oil fields.
Meanwhile, the Organization of the Petroleum Exporting Countries said its rivals will produce more oil than expected this year, boosted by the U.S. shale boom. In its monthly oil report, the cartel said the global need for its own crude will decline by 300,000 barrels a day in 2014.
“It’s an oversupplied market,” said Robert Yawger, director of energy futures at Mizuho Securities USA in New York.
He added that with a combination of bearish headlines “what’s the argument for the upside [in oil]? There is none.”
Market participants were also spooked Tuesday by comments from Atlanta Fed President Dennis Lockhart, who suggested the central bank could begin to scale back its $85-billion-a-month bond buying program as early as next month. The measure has helped oil prices by weakening the dollar, making crude cheaper to buy using other currencies.
Brent crude on ICE Futures Europe finished down 56 cents, or 0.5%, at $105.81 a barrel. The European benchmark, considered to be a gauge of world prices, was supported by stalled weekend negotiations between Iran and Western powers over the country’s nuclear ambitions.
Discussions between six nations and Iran failed to yield an agreement that could ease sanctions on Iran’s crude exports.
Investors worry that a deal for Iran to curb its nuclear activities may eventually lead to the return of more than 1 million barrels of oil to the global market. The negotiations are scheduled to resume on Nov. 20.
On Monday, Iran agreed to allow the United Nations’ nuclear watchdog, the International Atomic Energy Agency, more regular access to several significant parts of the country’s nuclear infrastructure. The news, while falling short of the demands of Western leaders, has provided some optimism for future talks.
Front-month December reformulated gasoline blendstock, or RBOB, fell 1.01 cents, or 0.4%, to $2.5864 a gallon. December heating oil declined 3.81 cents, or 1.3%, to $2.8532 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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