12 Apr

Daily Watch – Petrol scarcity eases, Oil price hits four month high

  • The petrol scarcity is gradually eas­ing off in Abuja and Lagos as several petrol stations over the weekend were seen dispensing the product, an indication that normalcy would be restored by midweek. However, there are still issues in other parts of the country as the product is still not available, or is being sold far above the approved price. Meanwhile, the FG has commenced the release of petrol to Independent Petroleum Marketers Association of Nigeria. The release of the product was part of efforts to settle the seven thousand pending loading tickets of IPMAN. According to Lawson Ngoa, secretary of the IPMAN reconciliation committee, IPMAN controls over 80 percent of petroleum products retail outlets in Nigeria, but they were not getting the products from the NNPC due to the internal leadership crises. Minister of State for Petroleum Resources, Ibe Kachikwu, had constituted a 14-man committee to resolve the petroleum marketers body’s crisis and end petrol scarcity in the country.
  • Minister of Finance, Kemi Adeosun, has set out the government’s plan to reset Nigeria’s economy with structured borrowing, targeted investment and diversified growth. Pointing to the impact of falling global oil prices on the economy, Adeosun said that Nigeria previously “had the means but not the will. Now we have the will but we no longer have the money to invest. The safety blanket of oil has been ripped away, laying the poverty of Nigeria’s institutions bare.” In an hour long presentation, the minister detailed what she described as an “expansionary budget for investment and growth.” Outlining N1.8 trillion in borrowing to invest in the priorities of transport, roads, housing, power and health, Adeosun said the government wanted to stimulate economic growth to achieve a real GDP growth of 4.2% in 2017; reduce the cost of governance and strengthen institutions to combat corruption extract efficiencies in public service; increase government expenditure on infrastructure; and fund the budget deficit and negative trade balance cost effectively. She said the targeted outcomes included: substantial increase in gross capital formation; acceleration of GDP growth; infrastructure development to unlock economic growth; diversification of the economy and growth of the non-oil sector; improvement in the overall business environment; improvement in key socio-economic indicators and jobs and wealth creation.
  • Brent crude prices have risen to a four-month high as a rally in the commodities markets encouraged buying ahead of a meeting of oil producers in Doha next Sunday. The meeting is aimed at freezing current output levels. Brent crude futures, the global benchmark, were up 92 cents at 42.86 dollars a barrel, having touched a session high of 43.06 dollars, the highest level since December 7. The gains build on last week’s rally, when crude rose 6 per cent in one session on the back of a drop in the rig count of U.S. drillers to its lowest since November 2009. Oil traders continue to place hopes on the oil producers’ meeting to prop up crude prices that have been severely depressed by a global supply glut. But analysts at Goldman Sachs, who expect oil to average 35 dollars a barrel in the second quarter, cautioned that the outcome of the meeting in Qatar could prove bearish for the market. Last week many oil market speculators agreed with a more bearish outlook as data from the ICE showed that net long positions on Brent had been cut to 355,225 contracts in the week to April 5. However, analysts are forecasting firmer demand for oil over the longer term.