Commodities
Major oil over-producers, Nigeria & Iraq, compelled to cut their production
Brent crude was slightly up by 0.04% to trade at $43.23 at 5:42 am local time on Thursday.
The U.S. Energy Information Administration (EIA) recently released its data showing a 5.654-million-barrel figure, which is higher than the 3.114-million-barrel draw predicted. Such increase came as a shocker to many oil stake holders, prompting OPEC+ to put more pressure on over-producers such as Nigeria and Iraq, to meet the level of compliance set by limiting their oil production.
Recall that barely two months ago, Nigeria and Iraq were reported not to have honoured their pledges, and had promised to limit global crude oil production by 9.7 million barrels of crude oil per day.
Iraq was able to achieve about 38% compliance rate of its agreed output cut for the month of May, while Nigeria, achieved much lower compliance of the agreed output cut, recording 19% compliance of what was agreed.
READ MORE: U.S dollar stays flat as America’s Federal Reserve becomes “extraordinarily uncertain”
Brent crude was slightly up by 0.04% to trade at $43.23 at 5:42 am local time on Thursday, while the West Texas Intermediate was slightly down 0.7% to trade at $40.87.
“The market is struggling to get strong conviction to the upside at the current point in time,” said Lachlan Shaw, head of commodity research at National Australia Bank in a note to Reuters. “There’s mixed evidence on demand.”
The implied volatility for Brent crude price has plunged it to the lowest levels triggered by prices collapsing at the end of Q1 2020 as many oil traders shifted their attention to tightening oil output due to the agreement with the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Explore economic research data from Nairametrics on Nairalytics
Meanwhile, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the macros that oil traders are taking seriously. He said:
“The industry seems more focused on medium and long-term drivers for oil. Still, traders are keeping an eye out for signs of a reaction to US production data and news on new Covid-19 infection numbers. US crude production was flat for the second consecutive week at 11mbd, down 1.3mbd y/y and down 2.1mbd from March. The EIA’s short-term energy outlook cut US production estimates for May and June but increased them for the second half of this year and 2021.”
Commodities
Lagos Commodities Exchange to start gold trading
The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.
The Lagos Commodities and Futures Exchange has concluded plans to commence trading of gold with the admission of Dukia Gold’s diversified financial instruments, backed by gold as the underlying asset.
The move is in support of the Federal Government’s effort to reduce dependence on oil, diversify the economy and boost the country’s foreign exchange earnings.
Dukia Gold said the financial instruments, which would be in form of exchange-traded notes, commercial papers and other gold-backed securities would enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the government to diversify external reserves and create jobs across the metal production value chain.
While making the disclosure, during a Pre-Listing media interactive session in Lagos on Thursday, the Chairman of Dukia Gold, Mr Tunde Fagbemi, applauded the Ministry of Mines and Steel Development and the Security and Exchange Commission (SEC) for supporting trading of gold in Nigeria.
What the Chairman of Dukia Gold is saying
He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us to facilitate our infrastructure development, expand capacity and create fungible products.
This has the potential to shore up Nigeria’s foreign reserve and create an alternative window for the preservation of pension funds. Gold-backed security is a hedge against inflation and convenient preservation of capital.”
Fagbemi pointed out that the company has refinery services to smelt metals with the capacity to meet local and international demand.
Going further, he said, “As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located.’’
Context of Gold Mining in Nigeria
It can be recalled that the Federal Government, in June 2020, commissioned the operations of Dukia Gold and Precious Metals Project (DGPMP). The project is expected to enable Nigeria to mine its gold reserves properly, trade responsibly and refine locally.
The Vice President, Prof. Yemi Osinbajo, while performing the virtual commissioning of the project, said Nigeria has potential reserves of 200 million ounces of gold reserves.
Osinbajo said that he believed that the Dukia gold project would encourage the emergence of smaller-scale mining companies which, for the first time, would have a transparent and welcoming market for their mined gold and precious metals.
Commodities
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
