Connect with us
iubh
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
app

Business News

Another reason why oil price will keep rising

Several factors are at play pointing to the reality that oil can only go up.

Published

on

reserves, Nigeria Crude Oil Prices, Nigeria wants international oil companies to pay up now , Trade conflict between United States, China continues to affect oil prices, Global oil prices rally to $69.16, as Soleimani killed in US air strike, Crude oil prices continue to rise on the backdrop of US-Iran tension, Coronavirus projected to affect crude oil demand negatively , Worry, as Coronavirus threat pushes oil price below budget benchmark, Coronavirus: FG to review budget as oil price plunges, BOOM: Crude oil price crash below $30 in worst trading day since 1930,Bears ravage Global market, Brent Oil surges 10% trading at $27.29 per barrel, Crude Oil up 10% as Brent crude raises to $27 per barrel, Oil market crisis – possible production shutdown looms, The time crude oil became cheaper than water,, Brent crude surges past $40, analyst recommends investment in crude oil derivatives, Nigeria's Bonny light hit four months high, Nigeria's Bonny light hit four months high
0

Even before last week’s OPEC meeting, there had been a lot of bullish sentiments in the oil markets.

Brent oil briefly touched $71 a barrel after Saudi Arabia revealed that its crude terminal (the world’s largest) was attacked by missiles and drones on Sunday morning, 7th March, 2021. Though it was successfully repelled, the information of the attack seems to have shaken the market.

Oil futures in London jumped by almost +3% to the highest price level since January 2020. Remember what happened in January 2020? The U.S attacked Iranian military officer, Qasem Soleimani, and geopolitical tensions sparked fears that the oil-producing nation might be badly affected if war ensued between the United States of America and Iran. Prices reached the same levels but later faded off as normalcy returned.

READ: Will the Oil markets miss Donald Trump?

Analysis done by Opeoluwa Dapo-Thomas

What next for oil?

Now that geopolitical tensions have been added to the mix with other bullish factors (asset rotation, inflation hedge, potential dollar weakening because of the trillion-dollar stimulus package, Shale troubles and potential market tightening with supply cuts), it would be a shame for oil bulls not to take prices to higher levels. All these should create the enabling environment for the much-hyped and anticipated $100 level.

READ: World’s largest oil producer loses four million barrels per day

However, there are other issues that could throw a curve ball at oil’s upward trajectory.

Firstly, rising US Treasury yield is pushing the dollar higher and as the saying goes, “Stronger dollar, weaker oil price rise.”

There are also challenges with demand. Flights are still empty and airlines still run low operations (which could change this summer).

SSKOHN

In addition, there was a potential return of U.S production, which surprisingly did not move the market last week.

Notably, there have been reports that claim Iranian oil is beginning to return to the market. Iran has been moving record amounts of crude oil to top client China, while India, the third largest global importer of oil after China & U.S. respectively, has state refiners adding Iranian oil to her annual import plans, based on the assumption that U.S. sanctions on Iran will soon ease.

READ: US vs Iran: Broad implications for Nigeria

However, analysts might argue that prices are retreating, as evident in today’s session where oil posted its first loss in four sessions. Chief Market Strategist at SIA Wealth Management, Colin Ciesynski, said “oil was getting a bit overbought in the short term.”

Stanbic 728 x 90

Also, if we look at the one year chart, it seems there is a strong resistance around $70 which has sent prices crashing downwards.

In all, though we might have a market correction, as banks and trading houses have indicated, we will have higher oil prices.

Will Nigeria take advantage of this prospective windfall? That is another kettle of fish.

0

Dapo-Thomas Opeoluwa is an Investment Banker and Energy analyst. He holds a degree in MSc. International Business, Banking and Finance from the University of Dundee and also holds a B.Sc in Economics from Redeemers University. As an Oil Analyst at Nairametrics, he focuses mostly on the energy sector, fundamentals for oil prices and analysis behind every market move. Opeoluwa is also experienced in the areas of politics, business consultancy, and investments. You may contact him via his email- [email protected]

1 Comment

1 Comment

    Leave a Reply

    Your email address will not be published.

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Business

    Lagos agricultural sector to generate $10 billion in the next 5 years

    The agricultural sector in Lagos state is projected to generate as much as $10 billion within the next 5 years.

    Published

    on

    Lagos, Sanwo-Olu, Businesses that must remain closed after May 4
    0

    The Lagos State Governor, Mr Babajide Sanwo-Olu, has projected that the agricultural sector in the state could generate as much as $10 billion within the next 5 years.

    This is as the governor noted that Lagos could no longer afford to rely exclusively on other states for its food, adding that it was time to unlock its immeasurable agricultural potential through the implementation of the 5-year roadmap.

    This disclosure was made by the Governor at the formal launch of the state’s 5-year Agricultural and Food Systems Roadmap, on Thursday, adding that most of the investments would be private sector-driven while the government acts as the catalyst and enabler.

    Governor Sanwo-Olu opined that the Roadmap would also lead to wealth generation, value creation, food security, the industrialisation of the agricultural sector and the entrenchment of inclusive socio-economic development of the state.

    He said that the roadmap essentially focuses on 3 pillars, which are: growth of the upstream sector, growth of the midstream and downstream sectors as well as improvement of private sector participation.

    What the Lagos State Governor is saying

    Sanwo-Olu, in his words, said, “Our strategies for sustainable Agricultural Development shall focus on three pillars. First, we will grow the upstream sector through interventions by leveraging technologies that are capable of lowering the cost of production of value chains; Focus on growing the midstream and downstream sectors that are of value and lastly, we will improve on private sector participation by developing and initiating policies that will encourage more private investments in agriculture.”

    The projection is that the total investment in the Agricultural Sector from the government, private sector, donor agencies and development partners will run into over $10 billion in the next five years. While we expect most of the investment to be private sector-driven, the government will continue to provide the needed infrastructure while the private sector will be encouraged to lead the key projects.’

    The governor pointed out that the state had already started the revamping of its Agricultural Land Holding Authority (ALHA) to support investment in agriculture, giving assurance that the coconut belt would also be strengthened with increased private sector involvement.

    Sanwo-Olu listed some State’s landmark investments that will aid smooth delivery of the Roadmap to include the Lagos State Aquatic Centre of Excellence (LACE) that would boost fish production from 20% to 80%, the Imota Rice Mill, the Lagos Food Production Centre Avia, Igborosu-Badagry as well as other statewide agriculture-focused initiatives.

    SSKOHN

    He said, “I am greatly encouraged by the interest already generated in the Five-Year Agricultural Roadmap and I hope it will be sustained and backed with concrete action on the part of our development partners and the international community. I assure you that the Lagos State Government is putting in place deliberate incentives to make your investment safe, secure and profitable.’

    Sanwo-Olu, therefore, urged potential and established stakeholders in the agricultural sector to partner with the state in order to transform the agricultural sector for food security, wealth generation, poverty eradication, economic diversification, rapid industrialisation and accelerated socio-economic growth.

    Bottom line

    This is a very laudable initiative from the Lagos State Government especially at a time the country is looking at diversifying its economy. The successful implementation of this programme with the expected benefits from the value chain will contribute significantly to the economic development of the state and the country in general.

    Stanbic 728 x 90

    The investment in the transformation of agriculture to agribusiness is one way of achieving the dream of attaining self-sufficiency in food production and creating more wealth.

    0
    Continue Reading

    Business News

    NNPC, SEEPCO sign gas development agreement for domestic market

    The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

    Published

    on

    0

    The Nigerian National Petroleum Corporation (NNPC) and an indigenous oil exploration and production firm, Sterling Exploration and Energy Production Company (SEEPCO), both partners in the Oil Mining Lease (OML) 143, have signed a Gas Development Agreement (GDA).

    The execution of the deal is to help reduce gas flaring in the country and a show of NNPC’s commitment to facilitating the country’s transformation into a gas-powered economy.

    According to a tweet post from NNPC on their official Twitter handle, the agreement between both parties was signed at NNPC’s head office, NNPC towers, on Thursday, April 22, 2021.

    The statement says that this latest milestone provides the terms for the development of OML 143 Gas, providing gas for the domestic market which aligns perfectly with the Federal Government’s National Gas Expansion Programme (NGEP).

    What this means

    The execution of this project will not only help to support the Federal Government’s effort in reducing gas flaring by monetizing it but will also play its part in the government’s effort in the expansion of gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy.

    This is coming at a time when the Federal Government is shifting focus to gas utilization as an alternative source of energy especially with the increase in the retail pump price of petrol. This is one of the various initiatives by the government as represented by the NNPC towards providing alternative sources of energy.

     

    SSKOHN
    0
    Continue Reading

      





    Nairametrics | Company Earnings

    Access our Live Feed portal for the latest company earnings as they drop.