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Oil prices slump from near 5-week high over lockdown concerns

The American WTI fell by 1.55% to sell for $25.38 per barrel, early Wednesday morning after surging 6.8% on Tuesday. Brent crude was down by 2.03% to sell for $29.37 per barrel.



DAPPMAN highlights critical role of warehousing and logistics in growth of downstream sector, Oil, Oil prices slump from 5 week high over lockdown concerns

Just barely a few hours after crude oil prices rose to a near 5-week high, it recorded a downward slide due to concerns about the early easing of lockdown prompted by to need to contain the coronavirus pandemic in the U.S. There are fears that the early exit from lockdown could lead to a resurgence in cases and ultimately derail a nascent recovery in demand.

The American WTI fell by 1.55% to sell for $25.38 per barrel, early Wednesday morning after surging 6.8% on Tuesday. Brent crude was down by 2.03% to sell for $29.37 per barrel.

The oil market weakened after US top infectious disease official, Anthony Fauci, stated that states reopening too quickly could set back the road to economic recovery. China’s easing of lockdown suffered a setback after new cases emerged in Wuhan, the epicenter of the outbreak, prompting an order for the entire population of 11 million to be tested.

In addition, according to data from the American Petroleum Institute (API), US crude oil inventory rose while gasoline stocks reduced on Tuesday. The crude oil inventory increased by 7.6 million barrels in the week as against the 4.1 million barrels that analysts had predicted.

(READ MORE: Nigeria’s bonny light crude price falls below Brent crude, WTI)

Gasoline inventory fell by 1.9 million barrels as against the 2.2 million barrels that were predicted by analysts.

Bonny light, Oil prices, Nigeria’s sweet crude hits $12, yet nobody is buying, Oil prices slump from 5 wee,k high over lockdown concerns, Oil prices slump from 5 week high over lockdown concerns

Crude oil price

Even with output cuts by OPEC+ and top oil-producing countries, and the gradual easing of lockdowns in some of the world’s top economies, oil price is still about 60% down this year with little clarity about when and if global consumption will get back to the way it was a pre-coronavirus disease.

The US, on Tuesday, cut its forecasts for global petroleum demand this year and next, while consultancy IHS Markit does not see the market recovering to pre-virus levels until the second half of 2021.

READ ALSO: Ratings firm explains why bank non-performing loans could be worse than expected

Some analysts have suggested that it is unlikely that a rebound in demand will occur in 2020.  They believe that barring any second wave of the coronavirus pandemic outbreak, normal demand could be returning towards the last quarter of 2021.

It could be recalled that Saudi Arabia, United Arab Emirates and Kuwait, have all moved for a further output cut, which will be more than what was required under the OPEC+ deal.

READ MORE: How technology is disrupting e-commerce, FMCG distribution

Stanbic 728 x 90

Saudi Arabia had announced an additional 1 million barrels per day output cut about 2 days ago. This announcement led to  a slump in oil prices.


Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business News

Heavy sell-off in Guinness shares leads to N6.9 billion market value loss in a single day

Shares of Guinness Nigeria Plc suffered a 9.89% loss today.



Guinness Nigeria Plc Reports Full Year F19 Results

Guinness Nigeria Plc suffered a 9.89% loss today following a heavy sell-off in the shares of the brewer. This triggered a market value loss amounting to about N6.9 billion at the close of trading activities on the Nigerian Stock Exchange, as investors scaled-down stakes in the brewer.

Data tracked at the close of the market today revealed that the shares of GUINNESS declined from N31.85 per share at the market open, to N28.70 per share at the close of the market today, to print a loss of 9.89%.

This decline saw the market capitalization of the leading maker of beer and spirits fall from N69.75 billion to N62.86 billion at the close of trading activities today, putting the total market value loss at N6.89 billion.

The shares of Guinness at the close of the market today cleared at N28.70 per share, 9.89% lower than the closing price of N31.85 per share yesterday.

At the current price, Guinness shares are currently trading 20.27% lower than their 52-week high of N36.00 per share. However, the shares of the company have returned about 120.8% gains for investors who bought them at their 52-week low trading price of N13.00 per share last week.

During trading hours on the Exchange today, about 159,380 ordinary shares of Guinness Nigeria Plc worth about N4.57 million, were exchanged in 27 executed deals.

The shares of Nigerian Breweries Plc and Golden Guinea Breweries Plc closed flat at N50.1 per share and N0.81 per share respectively, while the shares of International Breweries Plc shed 0.88% to close low today at N5.65 per share.

What you should know

  • At the close of trading activities today, the NSE All-Share Index and market capitalization appreciated by 0.29% to close higher at 39,128.34 index points and N20.477 trillion respectively.
  • The NSE Consumer Goods Index, an investable benchmark designed to track the performance of the shares of consumer goods companies like Guinness Nigeria Plc, depreciated by -0.35% to close the day lower at 553.26 index points.

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Business News

NAICOM revokes operational licence of UNIC Insurance, appoints Receiver/Liquidator

NAICOM stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.



Recapitalisation: 26 firms get NAICOM's approval

The National Insurance Commission (NAICOM) on Wednesday announced the withdrawal of the operational licence issued to UNIC Insurance Plc.

Although no official reason has been provided for the revocation of the insurance firm’s operating license, NAICOM, however, stated that the decision of the regulator was in the exercise of the powers conferred on it by the enabling laws.

According to a report from the News Agency of Nigeria (NAN), this disclosure is contained in a notice which was issued by the commission in Lagos to the general public and policyholders, where it noted that the revocation of the operational license, RIC 043, is with effect from March 25.

NAICOM, thereafter stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.

NAICOM in its statement said, “The general public/policyholders are by this notice required to direct all inquiries and correspondence regarding UNIC Insurance to the receiver/liquidator.

The receiver/liquidator will be dealing with the company’s liabilities in accordance with the provision of Insurance Act 2003.’’

What you should know

  • It can be recalled that NAICOM, for the third time in June 2020, gave insurance firms in the country a one-year extension to meet the recapitalisation obligation that was recently set for them apparently due to the coronavirus pandemic which had disrupted the activities of most insurance companies.
  • Some insurance companies had been going through some bad patches with a good number of them struggling to meet up with their obligations and the recapitalization requirements.
  • The recapitalisation programme requires life insurance firms to meet a minimum paid-up capital of N8.0 billion, up from N2.0 billion previously. In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3.0 billion previously.
  • The regulatory capital for composite insurance was raised to N18.0 billion from N5.0 billion previously while reinsurance businesses are now required to have a minimum capital of N20.0 billion from a previous N10.0 billion.

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