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Commodities

OPEC+ asks Committee to monitor Nigeria, others over extended oil production cuts

OPEC expects the increase in supply to be offset by countries like Nigeria

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Worry for Nigeria as forecast shows OPEC countries will face a challenging 2020 , Why OPEC may not change output cut soon, Weaker oil demand overshadows proposed OPEC output cuts, as oil price dips , Nigeria tops compliance list, as OPEC’s December crude output drops, OPEC, Russia planning biggest oil cut ever, OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation, OPEC+ asks Committee to monitor Nigeria, others over extended oil production cuts

The Organization of Petroleum Exporting Countries (OPEC) and its sister members have asked the Joint Technical Committee (JTC) to monitor underperforming members in the extended production cuts.

The body also requests that all underperforming nations including Nigeria, Iraq and others submit their plans for implementation of the “required compensation” for the month of June to the Secretariat by the end of the month.

READ ALSO: Nigeria only hit 56% of its target revenue in first five of months of 2020 

This was revealed in the recent 20th virtual meeting of the Joint Ministerial Monitoring Committee (JMMC). The body also commended Gulf nations like Saudi Arabia, Kuwait and the United Arab Emirates for making voluntary cuts to their production to keep the price stable. Oil production reached its lowest in nearly 30 years due to the production cuts of 9.6 million barrels.

Meanwhile, the Organization plans to reduce its production cut from 9.6 million barrels a day to 7.7 million barrels, OPEC expects the increase in supply to be offset by countries like Nigeria that did not meet full compliance on production cuts. Nigeria will join Iraq and Angola by engaging in a further 842,000 barrels a day of cuts through September.

READ MORE: OPEC launches Annual Statistical Bulletin (ASB)

OPEC agrees that a full 100% conformity for all members is fair deal, that is important to move the body to a unified voice in the future and deliver on long term goals. Adding that despite partial lockdowns, the recoveries in demand is clear. Adding that the extra supply from the ease in productio9n would be consumed locally be oil exporters as their economies reopen for business.

OPEC agrees that the new compensation policy was agreed by the nation affected and would lead to deeper level of adjustments.

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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.

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Nigeria's first gold refinery to provide over 500,000 jobs

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.’’

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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.

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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.

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Where next for oil prices?, Brent crude futures gained 0.14 to trade at $34.70 at the time this report was drafted, recovering some of its losses earlier in the oil trading session. , Brent crude price fails to remain over $40, concerns over pledge cut strengthens

Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.

At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.

READ: Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station

The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;

“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.

READ: Did OPEC+ April fool the oil market?

But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.

Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”

What to expect

Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.

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