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Global oil prices drop after reports of unexpected inventory build

The report also stated that distillate inventories were up by 6.9 million barrels for the week, as against last week’s 5.1 million barrel inventories.

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Global crude oil prices

Global crude oil prices declined slightly after a report by the American Petroleum Institute (API), on Tuesday, estimated a large crude oil inventory build of 8.731 million barrels for the week ended May 22, 2020. The situation is raising fresh concerns about excess supply.

The oil price decline was also extended due to uncertainty over Russia’s commitment to deep oil production cuts in the lead up to an OPEC+ meeting on June 9, 2020.

The American WTI fell by over 2% to end up at $32.09 per barrel as at 3 am on Thursday. Similarly, Brent crude further declined by 1.24% to sell at $34.31 per barrel, while the Bonny light crude was down by 2.32% to sell at $33.28 per barrel.

Analysts had predicted an inventory draw of 2.50 million barrels. In the previous week, the API had estimated a draw in crude oil inventories of 4.8 million barrels. Meanwhile, estimates by the US Energy Information Administration (EIA) were different, with the industry body reporting last week that the inventories had declined by 5 million barrels.

(READ MORE: Crude oil prices drop over fears of virus resurgence)

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The oil prices were already on a decline before the API’s data release, although the outlook for a rebalanced oil market is more positive than it was just two weeks ago. This is because many U.S states and some major economies around the world are easing lockdown restrictions, even as the world’s largest oil producers like Saudi Arabia, Russia, and the United States are implementing more output cuts than market analysts had predicted.

Oil pipelines, NNPC, Nigeria to have 11 oil and gas pipelines operational by 2023 , Crude oil price drop continues on reports of unexpected inventory build

Oil production in the USA has now declined from 13.1 million barrels per day on March 13 to 11.5 million barrels per day on May 15, according to the EIA, marking a drop of 1.6 million barrels per day. Note that this is more than OPEC’s production cut agreement from last year.

Note that the API had also reported an increase of 1.120 million barrels of gasoline for the week ending May 22 as against last week’s 651,000-barrel draw. This is more than 10 times the build that analysts had predicted.

The report also stated that distillate inventories were up by 6.9 million barrels for the week, as against last week’s 5.1 million barrel inventories. This is as Cushing inventories fell by 3.37 million barrels.

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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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Coronavirus

COVID-19: Russia produces first batch of its newly approved vaccine

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COVID-19: J&J starts vaccine trials on humans after success on monkeys

Russia announced on Saturday, August 15, 2020, that it has produced the first batch of its newly approved vaccine, Sputnik V, hours after the health ministry reported the start of its production.

The disclosure was made in a statement by the Russian Health Ministry and quoted by Russian news agencies.

This is coming some days after the Russian President, Vladimir Putin, announced the registration of the world’s first COVID-19 vaccine in what could be described as a step ahead of other vaccine developments.

The announcement is seen as a propaganda coup for the Russian government against the west amid a global race to develop vaccines against the coronavirus disease.

The announcement of the vaccine registration by Putin was met with caution from scientists and the World Health Organization (WHO), who said that it still needed a rigorous safety review. Some of the scientists fear that with this fast regulatory approval, Russia may be putting national prestige ahead of safety.

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Putin had said the vaccine was safe and that one of his own daughters had been inoculated, although the final stage testing involving over 2,000 people just started this week. Such trials are considered very important before a vaccine can secure regulatory approval.

Russia has said the vaccine which is the first for the coronavirus disease to go into production, will be rolled out by the end of August.

The Gamaleya Research Institute, which developed the vaccine in collaboration with the Russian Defence Ministry, said that Russia would be producing about 5 million doses a month by December or January.

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Companies

Heineken scoops more Nigerian Breweries shares in insider disclosure

The company has about 8 billion shares outstanding with Heineken as the majority shareholder.

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Nigerian Breweries major shareholder, Heineken disclosed it purchased 274,542 units at an average price N35.76 per unit.

Insider disclosures are reported on the Nigerian Stock Exchange as a regulatory requirement especially when it informs a major shareholder or director of a company purchasing shares in the company they own.

In a related development, its chairman Chief Kolawole Babalola Jamodu also purchased 10,000 units at N37 per unit.

Nigeria Breweries closed at N36 per share on Friday trading at a price to earnings of 34x. The company has about 8 billion shares outstanding with Heineken as the majority shareholder.

What this means: Insider purchases are often an indication of how shareholders perceive the company’s valuation. It can also mean a lot of things from a possible capital raise to a strengthening of their existing holdings.

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Nigerian Breweries has struggled for growth over the last few years as consumers continue to experience a change to taste and preference for alcohol.

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Business

Lagos announces additional tax incentives for businesses, individuals

Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown.

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LIRS further extends deadline for filing annual return by one month

The Lagos State Government has announced additional tax incentives and reliefs for businesses and individuals in the state, as part of measures aimed at reducing the burden on taxpayers amid the COVID-19 pandemic.

The disclosure was made in a public notice issued by the Lagos State Internal Revenue Service (LIRS) and signed by its Executive Chairman, Ayodele Subair.

The additional tax incentives are part of the several measures implemented by the LIRS to mitigate the impact of the coronavirus pandemic on taxpayers in Lagos and ensure business continuity.

The government had earlier given 3 months extension of deadline for filing annual returns from March 31 to June 30, 2020.

The additional measures being implemented by the state government include:

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  • LIRS shall be allowing on a case by case basis, the payment of outstanding liabilities in instalments to ease cash flow challenges that may affect taxpayers.
  • Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown (March-May 2020).
  • Waiver of penalties due on late filing of 2020 annual tax returns (Form A).
  • Waiver of interest and penalty components of outstanding tax audit liabilities from 2009 to 2015 for entities that present and keep to a structured payment plan that terminates on or before December 31, 2020.
  • Grant of tax credits of 20% of cash and kind donations made for COVID-19 by resident individuals to Lagos State Government for the 2021 Year of Assessment only subject to a cap of 35% of tax due.
  • Increase of payment channels to make payment of taxes easier, simpler and more convenient for all.
  • Adopting of video conferencing as the default mode for conduct of Tax Audit Reconciliation Committee (TARC) meetings in consonance with social distancing advisories from Government and other relevant authorities.

The Lagos state government expressed hope that all residents of the state would take advantage of these palliatives and reciprocate the government’s kind gestures by discharging their civic responsibilities by promptly paying their taxes and levies to the state.

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