Crude Oil Tops $55 for First Time in 16 Months – Thisday

  • OPEC to meet non-OPEC producers Dec 10 AfDB approves $600m loan for Nigeria

By Ejiofor Alike with agency report

Brent crude rose to over $55 per barrel monday, hitting a 16-month high on rising prospects of a tightening market after the Organisation of Petroleum Exporting Countries (OPEC) agreed on a landmark deal to cut production last week.

This is coming as OPEC is set to meet non-OPEC countries to finalise the global oil output-limiting agreement on December 10 in Vienna, Austria, the first of such meetings between the two groups since 2002.
With yesterday’s gains, Brent has risen by 19 per cent since OPEC reached the agreement, representing the highest in almost eight years.

U.S. crude, West Texas Intermediate (WTI), also recorded a 16 per cent gain since the cartel struck the deal.
Brent crude oil futures, the global benchmark, yesterday soared to their highest since July 2015 to $55.33 per barrel.

Reuters reported that it last traded at $55.05 per barrel, up 59 cents, or 1.1 per cent.
WTI crude oil also traded up 44 cents, or 0.8 per cent, at $52.12 per barrel.

After members of OPEC last week agreed to curb production by a combined 1.2 million barrels per day (bpd) from January, all eyes have now turned to a meeting this weekend between OPEC and non-OPEC producers to expand the deal.
The Secretary General of OPEC, Mr. Mohammed Barkindo, said yesterday that the organisation would meet non-OPEC countries on December 10 in Vienna, to finalise a global oil output-limiting pact, the first of such a meeting since 2002.

Barkindo said OPEC had invited non-OPEC countries – Russia, Colombia, Congo, Egypt, Kazakhstan, Mexico, Oman, Trinidad and Tobago, Turkmenistan, Uzbekistan, Bolivia, Azerbaijan, Bahrain and Brunei – on December 10 to discuss their contribution.

Barkindo announced plans for the meeting at India’s Petrotech Energy Conference in New Delhi.
The OPEC and non-OPEC meeting had earlier been due to take place in Moscow.

Barkindo yesterday told reporters on the sidelines of the Indian conference that OPEC expects oil demand in 2017 to be as robust as this year.

He said Asia would have a big role to play in the demand growth and that there was plenty of room for OPEC and non-OPEC countries to grow in the global oil market.

“We want the inventory level to be at a past five-year average, not more and not less than that,” he said.
At the 171st meeting of the conference of OPEC held in Vienna, Austria, on November 30, the cartel said it was vital that stock levels were drawn down to normal levels.

In line with the ‘Algiers Accord’, the conference decided to implement a new OPEC-14 production target of 32.5 million barrels per day, in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward.

According to the communiqué, the agreement will be effective from January 1, 2017.
Member countries, in agreeing to this decision, confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers.

In line with recommendations from the high-level committee of the ‘Algiers Accord’, the cartel also agreed to institutionalise a framework for cooperation between OPEC and non-OPEC producing countries on a regular and sustainable basis.

OPEC underscored the importance of other producing countries joining the agreement.
Non-OPEC producers are expected to agree to add an output cut of 600,000 barrels per day (bpd) at the meeting in Vienna.

Hiring foreign consultants to monitor budgets is waste of scarce forex – ICAN – Businessday

Institute of Chartered Accountants of Nigeria (ICAN) says plans by the Federal Government to hire foreign consultants to monitor Ministries, Department and Agencies’ (MDAs) budget is a waste of scarce foreign exchange.
ICAN observes that the idea to monitor budget is a laudable one, but the Federal Government does not require the services of foreign consultants to monitor the budgets, saying the country has auditors and chartered accountants who are sufficiently trained to monitor and audit projects with financial implications.
In a letter written to the Federal Government signed by Titus Soetan, 52nd president, and Rotimi Omotoso, registrar/chief executive of ICAN, and obtained by BusinessDay, the Institute says what is operational in other climes is the implementation of a Single Audit Process, which will require MDAs to obtain a yearly financial statement audit in addition to a compliance review of the terms and conditions of its federal awards by a professional auditors.
Omotoso advises that all government needs to do is compel MDAs to prepare financial statement, have it audited and also have their projects verified.
According to Omotoso, “Who is in the position to do this than professional accountants that we have in this country, I think we should give them a chance to do their jobs. Not look outward into foreign shore and foreign consultants who will not do much.”
He urges the government not to expend scarce resources on monitoring projects that can ordinarily be done by Nigerian professional accountants, saying, “We are of the firm belief that involving Nigerian accounting firms in the exercise would not only yield better results, but also help create jobs for the citizens.
“The so-called foreign consultants to be hired would be paid in dollars. They don’t accept naira for their service, but I am sure ICAN members will always accept naira.”
It would be recalled that a publication in the Guardian Newspaper of November 29, 2016, reported that the Federal Government was to hire foreign consultants to monitor MDAs’ budget.
According to the publication, “this is part of the government’s plan to strengthen the monitoring and evaluation content in the 2016 and 2017/2019 budgets.” This idea to hire a foreign consultant is also reported to be one of the key recommendations presented to the government by a former Georgian prime minister, Nika Gilauri, who is also a foreign consultant to the national economic team.

Terminal operators seek downward review of import duty to 20% – Businessday

FG questions complications on ECOWAS external trade agreements – Businessday




Adeosun, Emefiele back BoI scrapping, bank kicks – Punch

The Bank of Industry has kicked against the current move by the Senate to scrap it and establish the National Development Bank in its place.

The Acting Managing Director, BoI, Mr. Waheed Olagunju, made this known on Monday at a public hearing organised by the Senate Committee on Banking, Insurance and Other Financial Institutions on the establishment of the NDB.

The Minister of Finance, Mrs. Kemi Adeosun; and the Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, however, backed the Senate on the move.

A bill seeking to establish the NDB had passed second reading in the Senate on October 12.

Titled: ‘A Bill for an Act to establish the National Development Bank, 2015’, and sponsored by Senator Ibrahim Gobir, it seeks to repeal the BoI, the Bank for Commerce and Industry Act and the National Economic Reconstruction Fund Act.

The bill further seeks to bring the total assets of the organisations under one body to be called the National Development Bank.

Olagunju, in his presentation, insisted that the BoI was already fulfilling the mandate of the proposed development bank.

The BoI boss stated that what was needed was more funding of the bank by the Federal Government so as to increase its support to the real sector rather than duplicate functions with the establishment of another bank with a similar purpose.

Olagunju said, “We are of the opinion that the BoI, as presently constituted, is fulfilling the mandate envisaged in the proposed legislation by supporting genuine entrepreneurs. Therefore, it should be left to continue its operations as it is. The merger envisaged in the proposed bill has already taken place.

“The BoI should be provided with more capital to be able to further support the real sector instead of duplicating functions by creating new development finance institutions, bearing in mind the failure of similar DFIs in the past, such as the NBCI, NERFUND, People’s Bank, Community Banks, etc.”

He added, “We advise that the National Assembly should support industrialisation by enacting legislation that will help create an enabling environment for business to thrive, such as an amendment to the Land Use Act, tax incentives for SMEs and establishment of industrial parks.

“This will substantially address the demand challenges of finance for SMEs in Nigeria, as vagaries of the business environment have been making the sector unattractive to private and public lenders.”

However, Adeosun, who was represented by a director in Ministry of Finance, Christopher Gabriel, said the ministry strongly supported the bill, adding that the proposal was in tandem with the economic reconstruction efforts of the Federal Government.

Nigeria’s Buhari to submit 2017 budget to lawmakers on Dec.14 – Reuters

By Felix Onuah and Camillus Eboh | ABUJA

Dec 6 Nigeria’s President Muhammadu Buhari plans to submit next year’s spending plan to lawmakers on Dec. 14, according to a letter read to parliament on Tuesday, with government sources saying the 2017 budget would be 7.2 trillion naira ($23.65 billion).

The record spending plan will seek to boost spending to help pull Africa’s largest economy out of its first recession in 25 years, caused largely by low global oil prices. Crude sales account for two-thirds of government revenue.

Nigeria planned a 6.06 trillion-naira budget for 2016 but has struggled to fund it. Attacks on energy facilities in the Niger Delta region since January have reduced oil output, at one stage by more than a third, cutting revenue from crude sales.

In a letter to lawmakers read to parliament on Tuesday, Buhari said he wanted to present his budget plans to a joint session of both chambers of parliament on Dec. 14. It did not provide details of the spending plan.

“Mr President will be presenting a budget proposal of 7.28 trillion naira on a benchmark of $42.5 hinged on a daily oil production of 2.2 million barrels per day,” said a senior civil servant, who did not want to be named. 

A second senior civil servant, who also wanted to remain anonymous, said those were the figures in the spending plan.

Last month, lawmakers said the 2017 draft budget framework, used to draw up the final spending plan, was based on unrealistic assumptions about oil production and the currency exchange rate.

“We believe that with the level of ongoing negotiations and consultation going on with the people of the Niger Delta we can achieve and sustain that production level for the year,” the civil servant said.

The spending plans must be agreed by parliament before being sent back to the president to be passed into law.

It could be months before a final budget is passed into law. The 2016 budget became law in May after being delayed by several months by wrangling between the government and the Senate, the upper house of parliament.

Budget Minister Udoma Udo Udoma last week said the cabinet had approved next year’s budget, although he did not provide further details.

($1 = 304.50 naira) (Writing by Alexis Akwagyiram; Editing by Chijioke Ohuocha, Larry King)

Dollar Gains on Fed Hopes – WSJ

Investors are looking ahead to the Fed’s monetary policy meeting, which concludes December 14

The dollar rose Tuesday on expectations that a steadier U.S. economy may force the Federal Reserve to raise interest rates at a faster clip in coming months.

The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% at 91.06.

Investors are looking ahead to the Fed’s monetary policy meeting, which concludes December 14. Indications that the central bank is taking a more hawkish view on monetary policy could send the dollar higher, as rising rates make the currency more attractive to yield seeking investors.

“The extent to which the greenback has risen over recent months may necessitate a hawkish statement from the central bank if it is to push beyond its recent highs,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, in a note to clients.

The U.S. currency reached a 14-year high last month, buoyed by expectations that proposed fiscal spending measures and tax cuts by the incoming presidential administration will boost U.S. growth.

Federal-funds futures, used to bet on central bank policy, on Tuesday showed that investors assigned a nearly 93% likelihood of a rate increase in December.

Write to Ira Iosebashvili at

    Euro slips from three-week highs, ECB meeting in focus – Reuters

    By Karen Brettell | NEW YORK

    The euro slipped from three-week highs against the U.S. dollar on Tuesday, following a strong rally on Monday, as investors awaited Thursday’s highly anticipated European Central Bank policy meeting.

    The euro gained on Monday after Italian Prime Minister Matteo Renzi’s loss in a referendum over constitutional reform, something that traders had expected.

    Investors are now focusing on the possibility that the ECB may take a more hawkish turn, even as it is widely expected to extend its bond purchase program. 

    “The short-term market is still short euros and I think they might be nervous – time to square up a little bit more ahead of the ECB meeting,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

    The euro has retraced some of its weakness in recent weeks, with investors seeing the move as overdone and as fears ease that Italy will look to leave the euro zone in the near-term.

    The renewed weakening of the euro on Tuesday was seen as consolidation after Monday’s strong move, rather than being driven by fundamental factors.

    “Such was its size, it was always going to retrace some of it,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

    The euro had weakened against the dollar in the first half of November, with the surprise election of Donald Trump as U.S. president on Nov. 8 accelerating the move.

    The euro has been held back by concerns about the stability of the euro zone and on dovish central bank policy, while the greenback has gained on expectations of solid U.S. growth.

    The euro EUR= was last down 0.46 percent against the dollar, at $1.0713, after hitting a three-week high of $1.0796 on Monday.

    The dollar index .DXY, which measures the greenback against a basket of six major currencies, rose 0.41 percent to 100.50, after dropping to 99.849 on Monday, the lowest level since Nov. 15.

    The Australian dollar fell on Tuesday after the central bank struck a cautious note on the economy as it kept interest rates on hold.

    Australian gross domestic product data due later on Tuesday will next be watched for further indications about the economy’s strength.

    “There is some risk of a negative print,” said Westpac’s Franulovich.

    The Aussie AUD= fell 0.24 percent to $0.7456.

    (Editing by Nick Zieminski and Leslie Adler)

    Oil falls on output cut skepticism, OPEC and Russia output rise – Reuters

    By Scott DiSavino | NEW YORK

    Oil prices on Tuesday ended lower for the first time since OPEC agreed on Nov. 30 to cut output, as data showing record high production in the producer group fed skepticism that it would be able to reduce supplies.

    Brent futures slid $1.01 to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents to $50.93 per barrel. Crude had surged more than 15 percent in the four sessions since the Nov. 30 OPEC meeting.

    “Prices fell for the first day in five in reaction to news that OPEC’s output hit a record high last month,” said James Williams, president of energy consultant WTRG Economics in Arkansas.

    OPEC’s output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey.

    Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma. [API/S]

    If the Cushing build is reinforced in Wednesday’s report from the U.S. Energy Information Administration, that would signal the largest weekly rise since January 2009, data showed.

    As part of last week’s decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC’s 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms.

    Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.

    Market watchers had said OPEC’s decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices.

    But in a sign the fight for market share is not over, Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.

    The U.S. EIA expects U.S. crude production to fall less than previously expected to 8.9 million bpd in 2016 and to 8.8 million bpd in 2017 from 9.4 million bpd in 2015, according to its monthly short term energy outlook.

    (Additional reporting by Sabina Zawadzki in London, Henning Gloystein in Singapore and Polina Devitt and Anastasia Lyrchikova in Moscow; Editing by Marguerita Choy, Meredith Mazzilli and David Gregorio)

    COLUMN-OPEC expected to deliver only half of target production cut: Kemp – Reuters

    (John Kemp is a Reuters market analyst. The views expressed are his own)

    *  Chart 1: 

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    *  Chart 3:

    By John Kemp

    LONDON, Dec 6 (Reuters) – OPEC will achieve some but not all of the production cuts the organisation agreed last month, according to an informal survey of energy professionals conducted after the agreement was announced.

    Most energy professionals expect OPEC output will decline to around 33.0 million barrels per day in January 2017, down from 33.6 million bpd in October but well above the deal’s target of 32.5 million bpd.

    Most of the 260 respondents to the survey think the organisation will succeed in cutting output, but on average by only 600,000 bpd, or half its stated target of 1.2 million bpd.

    Less than 8 percent thought OPEC would achieve its target in full. More than twice as many thought output would stay the same or rise (

    Scepticism about OPEC’s ability to meet its target underlines the challenge facing the organisation as it tries to reduce global oil stocks and raise prices next year.

    Saudi Arabia and its allies Kuwait, Qatar and the United Arab Emirates have pledged to cut their combined production by almost 790,000 bpd with effect from January (

    Cuts by these members will probably be delivered in full, or almost, given their track record of complying with past output agreements.

    But the current deal assumes cuts of around 380,000 bpd from other members of OPEC, most of which have a poor track record of compliance and are unlikely to deliver them in full.

    In addition, Nigeria and Libya were specifically exempted from output ceilings imposed on other members of OPEC to allow them to increase production if they can restore security at their oil facilities.

    Most OPEC members actually raised production last month, even as they talked about reducing it from January, as they tried to defend market shares and establish the highest possible baseline for future cuts.

    OPEC production hit a record high of 34.19 million bpd in November from 33.82 million bpd in October, according to the official Reuters survey (“Ahead of deal to cut, OPEC oil output hits record high”, Dec. 5 ).

    OPEC members have been consistently boosting production for the last six months even as they have been talking about the need for a freeze or cut to drain excess stocks (

    The short-term boost in production has worsened the supply situation, increased stockpiles, and made the eventual process of rebalancing harder.

    If OPEC members can deliver some sort of production cut, even one of only 600,000 bpd, it will help bring rebalancing forward, but the process is still likely to be a long and difficult one.

    OPEC needs strong growth in oil consumption next year to absorb cheating by the organisation’s members, as well as a possible increase in exports from Nigeria and Libya, and a potential rise in U.S. shale production.

    (Editing by David Evans)