Oil prices rose, reversing earlier losses, as investors latched on to positive supply-side drivers for the market, although concern about the wider economy simmered in the background after data pointed to a slowdown in China.
Brent crude oil futures were up 11 cents at $62.81 a barrel. U.S. crude futures were up 14 cents at $53.94 a barrel.
The oil benchmark for Nigeria’s Budget 2019 is $60 per barrel.
Oil industry experts described the rise in crude prices as good for the local economy.
Analysts said a more robust backdrop for financial markets, together with the prospect of slower crude production growth, were the major drivers behind the rally in oil.
“The stock market performance is one of the reasons why oil keeps marching higher. There also seems to be a general belief that the agreed cut in Organisation of the Petroleum Exporting Countries (OPEC)+ production will be sufficient to balance the market,” PVM Oil Associates said in a note.
Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28-year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S.-China trade tensions.
But stocks are still up nearly 8 percent so far this month, which in turn has given oil investors more confidence to bet aggressively on a rise in crude prices.
#DidYouKnow That Ghana deported 994 Nigerians since 2018?
The Nigerian government has disclosed that 994 of its nationals were deported from Ghana – Abike Dabiri
The Nigerian government did not disclose why they were deported but said 508 of them were deported within the last six months, while 486 were repatriated in 2018.
This was made known by the Senior Special Assistant to President Muhammadu Buhari on Diaspora Affairs, Abike Dabiri-Erewa.
Dabiri-Erewa made the disclosure while meeting a Nigerian professor, Augustine Nwagbara, who was sacked by the University of Education, Winneba, for incitement.
She warned of dire consequences if its nationals are shabbily treated in Ghana and on the African continent.
She said, “It will not go down well on the continent if Nigeria decides to do what they do to Nigerians over there. We demand respect.
“If a Nigerian commits a crime, you should deal with that particular person rather than generalize issues by punishing those who are innocent of the crime.”
Lagarde leaves IMF
The International Monetary Fund (IMF) Managing Director, Christine Lagarde, has resigned her appointment and will be leaving the Bretton Woods institution on September 12.
IMF’s Executive Board in a statement yesterday in Washington DC, said it had accepted her resignation and would soon kick-start the process to find her replacement.
“Today the IMF Executive Board accepted Managing Director Christine Lagarde’s resignation from the Fund with effect from September 12, 2019.
“With this decision by Managing Director Lagarde, the IMF Executive Board will initiate promptly the process of selecting the next managing director and will communicate in a timely fashion.
“The Executive Board has the utmost confidence in Mr. David Lipton, who remains Acting Managing Director of the Fund in the interim period,” it said.
Lagarde had announced in a statement yesterday that she had submitted her resignation from the IMF and it would go into effect in September.
“I have met with the Executive Board and submitted my resignation from the Fund with effect from September 12, 2019.
“The relinquishment of my responsibilities as managing director announced previously will remain in effect until then.
“With greater clarity now on the process for my nomination as ECB President and the time it will take, I have made this decision in the best interest of the Fund, as it will expedite the selection process for my successor,” Lagarde said.
According to her, while the Executive Board would be taking the needed steps to proceed toward selecting a new managing director, David Lipton would remain the Fund’s acting managing director.
On July 9, the EU Economic and Financial Affairs Council adopted a formal recommendation to nominate Lagarde as president of the European Central Bank.
Her nomination will now be discussed by the ECB governing council and the European Parliament, and the final appointment by European Council in October.
She was named as the next Managing Director of the IMF for a five-year term, starting on July 5, 2011, replacing Dominique Strauss-Khan.
Oil prices in steady decline
US crude stocks fell 9.5 million barrels in the week to July 5, more than triple the 3.1 million barrel draw analysts had expected, as refineries ramped up output, the country’s Energy Information Administration (EIA), said.
The report followed data from the American Petroleum Institute (API), an industry group, on Tuesday that had boosted oil prices earlier.
Reuters reported that major oil firms began evacuating and halting production in the Gulf of Mexico after weather forecasts warned that a tropical disturbance might become a storm yesterday (Wednesday) or today.
Chevron Corporation, Royal Dutch Shell, BP, and BHP Group were in the process of removing staff from 15 offshore platforms.
ExxonMobil said it was “closely monitoring” the disturbance to determine if its facilities might be affected.
The Gulf of Mexico is home to 17 percent of United States crude oil output, which stands at around 12 million barrels per day (bpd).
OPEC to Rollover Crude Oil Output Cut Deal
OPEC is to roll over a deal on cutting crude supplies at a meeting next week and discuss deepening the curbs that have been in place since January 1, 2019. A deal between OPEC and allies, including Russia, to curb oil output by 1.2 million barrels runs out at the end of June.
With the expiration of the agreement this week, the group has scheduled meetings from July 1-2 in Vienna, Austria to discuss the next steps.
However, Iraq’s Oil Minister, Thamer Ghadhban, has said the group would extend the current deal and consider deeper production cuts.
He said the issue would be discussed in Vienna but declined to specify what alternative level of cuts were being suggested.
“The rollover at least would be at the same level because it has not been very effective, it has been effective to a certain level to minimize the glut in the market, but there are now ideas or calls for agreeing (on) even more,” Ghadhban said on the sidelines of the CWC Iraq Petroleum Conference in London.
Reuters reported that Algeria had floated an idea of deepening the cut by some 600,000 bpd, to make it 1.8 million barrels per day.
Oil prices hit their highest in about a month on Wednesday, buoyed by United States government data that showed a larger-than-expected drawdown in crude stocks as exports hit a record high, and surprise drops in refined product stockpiles.
The price of the global benchmark, Brent crude, which dropped to $65 per barrel yesterday, had risen $1.44, or 2.2 per cent to settle at $66.49 a barrel on Wednesday, while the US West Texas Intermediate (WTI) crude futures rose $1.55, or 2.7 per cent, to settle at $59.38 a barrel.
The product drawdown comes at the same time as news that the largest and oldest refinery on the US East Coast would be shut after a massive fire last week caused substantial damage.
According to agency reports, Philadelphia Energy Solutions plans to shut down the 335,000 bpd refinery complex next month.
The crude inventory fall and refinery outage added to uncertainty over oil supplies created by the war of words between Washington and Tehran.
This has prompted fears that oil shipments through the Strait of Hormuz, the world’s busiest oil supply route, could be disrupted.
Asked if a war was brewing, US President Donald Trump told Fox Business Network on Wednesday: “I hope we don’t but we are in a very strong position if something should happen.”
Tehran has condemned a fresh round of US sanctions, describing it as “mentally retarded.”
But the US Special Representative on Iran, Brian Hook, told Reuters in an interview yesterday that the United States’ policy of maximum economic pressure on Tehran was working.
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