Crude oil price yesterday headed for its biggest one-day drop in a month as a result of evidence of yet more growth in US crude supply.
This is coming as the federal government has unveiled plans to mobilize other oil and gas producers in Africa on the platform of African Petroleum Producers Organisation (APPO) to raise up to $2 billion to finance energy projects across the continent.
Further weighing on oil markets is the trade dispute between the United States and China, which looks unlikely to end anytime soon and has increasingly impacted on the Chinese economy.
However, the price is still on course for its strongest January gain for 14 years.
The global benchmark, Brent crude oil was down $1.49 at $60.15 per barrel, down 2.5 percent on the day in their largest one-day percentage fall since late December, while US futures fell $1.71 to $51.98 a barrel.
United States crude production, which hit a record 11.9 million barrels per day late last year, has undermined sentiment in the oil market, Reuters quoted oil traders as saying.
US energy companies last week increased the number of rigs looking for new oil for the first time since late December to 862, energy services firm Baker Hughes said on Friday.
Even with an uncertain outlook for demand and evidence of growing supply, the oil market has benefited this month from another round of production cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its partners, as well as robust trade in physical barrels of crude led by China.
The price has risen by 12 percent so far in January, the largest increase in percentage terms in the first month of the year since 2005 when it gained 14 percent.
Investors have added to their bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange.
But much of the demand outlook hinges on China and whether its refiners will continue to import crude at 2018’s breakneck pace.
Industrial companies in China reported a second monthly fall in earnings in December, despite the government’s efforts to support borrowing and investment.
Fraud: 9 FIRS senior official detained by EFCC
Nine senior officials of the Federal Inland Revenue Service (FIRS) are currently in detention over alleged multi-billion naira fraud.
The officials, who are being detained by the anti-graft agency (EFCC) in Abuja, include the Director of Finance and Accounts (DFA) of the FIRS, Mohammed Auta.
Apart from Auta, another director of the agency, Peter Hena, is also alleged to be involved in the scandal.
Hena, the Coordinating Director, Support Services Group of the FIRS, is currently out of Nigeria and will be arrested as soon as he returns to the country, EFCC sources told this newspaper.
A top official of the FIRS, however, said Hena is on official medical leave outside the country and did not flee.
Hena is believed to be one of the closest officials to the FIRS chairman, Babatunde Fowler.
It is still unclear to EFCC officials, whether or not Fowler is involved in the scandal.
Details of the scandal are still sketchy as at the time of this report. However, Auta and Hena are being investigated for allegedly diverting about N6 billion tax funds that should have gone to the Nigerian government, anti-corruption officials said.
Our reporter learnt that most of the other affected officials are from the finance and account department of the FIRS.
All the officials have been in the EFCC detention since April 1.
It was learnt the EFCC is closing in on several other senior officials of the revenue collection service in a widening investigation to uncover other fraudulent activities involving several billions of government tax revenues.
When contacted on the detention, the EFCC spokesperson, Orilade Tony, promised to get back with more information. He was yet to do so at the time of this report.
The FIRS is saddled with collecting taxes and revenues of the federal government.
The agency under Mr Fowler has seen its revenue generation improve, setting new records. The agency said it collected about N5.32 trillion as revenue in 2018, the highest in Nigeria’s history.
Oil prices drop again
Oil prices fell yesterday, after rising to five-month highs earlier this week on the Organisation of Petroleum Exporting Countries (OPEC)-led production cuts and free-falling Venezuelan output.
International benchmark Brent futures were down $1, or 1.4 per cent, at $70.73 a barrel. Brent hit a more than five-month high at $71.78 on Wednesday.
United States (U.S.) West Texas Intermediate crude oil futures fell $1.11, or 1.7 per cent, to $63.50 per barrel. WTI whit a high of $64.79 going back to Nov. 1 earlier this week.
Selling accelerated yesterday morning as U.S. crude dropped below $63.71 a barrel, a technically-significant level at which some funds had stops in place, triggering automatic sales, said Bob Yawger, director of energy futures at Mizuho in New York.
U.S. crude inventories surged by 7 million barrels to a 17-month high of 456.6 million barrels last week, the Energy Information Administration said on Wednesday. However, U.S. gasoline stocks fell by a whopping 7.7 million barrels, sending U.S. gasoline futures higher by 3.5 per cent on their close on Wednesday.
U.S. crude oil production remained at a record 12.2 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
The surging production and regional refinery outages have depressed prices of cash grades, putting more pressure on U.S. crude, said Yawger.
U.S. West Texas Intermediate crude at Midland yesterday traded at the biggest discount to futures in almost four months after Phillips 66 closed a unit for maintenance at its Borger, Texas refinery, adding to a backlog of barrels as production climbs.
Oil markets are tightening amid the increasing effectiveness of U.S. sanctions on Iran and Venezuela, the International Energy Agency said yesterday.
U.S. sanctions and power outages pushed OPEC member Venezuela’s crude output to a long-term low of 870,000 bpd, IEA says. Two days ago, OPEC reported Venezuela’s March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd.
Obi supports Tinubu on VAT
Vice Presidential candidate of the Peoples Democratic Party (PDP) Peter Obi has hailed National Leader of the All Progressives Congress (APC), Asiwaju Bola Tinubu, on his position on the proposed increment in Value Added Tax (VAT).
Tinubu, last Thursday, advised the Federal Government against increasing VAT rate as being canvassed by the Minister of National Planning, Udoma Udo Udoma and the Executive Chairman of the Federal Inland Revenue Service, Mr. Babatunde Fowler.
In a statement yesterday by his media office, Obi described Tinubu’s advice as gratifying and making economic sense given the situation in the country.
According to him, Tinubu’s position was clearly at variance with that of his party, saying it goes to underscore the uncoordinated campaign the APC dished out to Nigerians.
Obi, who said tax must be relaxed to act as incentive to local and foreign investors, insisted that the right way to shape up the economy in the face of mass unemployment is to have attractive economic policies to encourage entrepreneurs and investors.
According to him, the call for an increase in VAT or other taxes in the present economic situation amounted to insensitivity on the part of the government.
He, however, noted that Tinubu’s advice was in tandem with the position of the PDP, stressing that tax reduction was one of the main electioneering campaign messages of the PDP presidential campaign.
“It is extremely unrealistic for anybody to think of growing the economy and creating jobs by increasing tax. It’s too simplistic an approach,” Obi reiterated.
The former vice presidential candidate enjoined Tinubu to also advise the All Progressives Congress (APC) to embrace restructuring, saying it is the only option left to move the country forward.
“Anybody thinking this country will work without tinkering with the political and economic structure is deceiving himself because no nation grows on injustice,” he noted.
55,000 tax defaulters in Nigeria
The Federal Inland Revenue Service (FIRS) has disclosed that it recently discovered not less than 55,000 tax defaulters from the bank accounts substitution initiative that it embarked upon earlier this year.
The Chairman of the Service, Babatunde Fowler, made the disclosure at a stakeholders’ forum and the official presentation of the ‘Nigerian Tax Outlook 2019,’ that took place in Lagos.
Fowler, while highlighting the achievements of the service, especially as its recorded N5.3 trillion revenue in 2018, the highest in the history of Nigeria, he stated that the feat was made possible by the various innovations and initiatives introduced by the FIRS.
“We had the tax amnesty in 2016 and we were able to generate N96 billion from people who had not declared or paid their taxes, there is also the VAID, which equally threw up a declaration of N92 billion, we also organized the stakeholders meeting requesting all to come forward, register and pay their taxes.
“At the meeting, we were able to identify over 3,700 companies that have banking turnover of one billion and above annually for three years, with no tax ID and payments.
“We went further to the banking sector earlier this year to find businesses and operators of bank accounts with an N100 million turnover, but no tax identity.
“Surprisingly, we were able to discover 55,000 non-compliance and non-tax payers among us,” he divulged.
The FIRs boss also made some clarifications on the purpose of Value Added Tax (VAT), which he said had generated controversies recently.
“VAT simply means consumption tax. A lot of people have been saying VAT is a hardship on the poor but I say that it is a support to them.
“An increase in VAT would definitely translate to a better life to the vulnerable in the society including the poor, needy and less privileged. If you don’t have money to consume, VAT is not your problem, you first of all need to have the ability and disposable income to spend, before you can be charged VAT.”
Continuing, he said: “It is a source of revenue to the state governments, 85 percent of the revenue collected from VAT is shared among the state governments, who are supposed to directly impact my life and yours.
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