Anxiety mounts over OPEC’s stance on oil output.
Amid a crippling recession, presidential impeachment proceedings and the biggest corruption scandal Brazil has ever seen, there’s one crisis the nation did dodge this year: severe water rationing. Iron ore will probably drop below $40 a metric ton this week after stockpiles at ports in China climbed to the highest in about seven months, according to Australia & New Zealand Banking Group Ltd.Oil extended its losses in Asian Monday morning hours after OPEC said last Friday that it would maintain production at the current levels and made no decision on a new target ceiling. “Today’s decision came in line with our view that it is not in OPEC’s interest to balance the market on its own in the face of still growing higher cost production,” wrote Goldman Sachs.BTG Pactual is lining up buyers for almost half its credit portfolio as it deals with the fallout of its billionaire chairman being in jail on charges related to Brazil’s so-called Carwash scandal.TOUGHER times seem to lie ahead for Nigeria as the Organisation of Petroleum Exporting Countries (OPEC) decided to maintain crude oil output despite pressure to cut production to ameliorate the effects of the plummeting prices on member countries’ revenues.
At the start of this year, the state-run water utility known as Sabesp was facing a water shortage so devastating it was prepping contingency plans to cut supplies for up to five days a week across neighborhoods in metropolitan Sao Paulo. Port holdings, tracked as a gauge of demand in the largest consumer, jumped 2.1 percent to 89.50 million tons last week, according to Shanghai Steelhome Information Technology Co. Democratic presidential front-runner Hillary Clinton is naming names — Facebook, YouTube and Twitter — after previously calling on Silicon Valley more generally to do more to stop terrorist communications. There was expectation from Nigeria and other members that the organisation would reduce production output to boost crude oil prices which have been on the downward trend since June last year.
As 2015 draws to a close, reservoirs are filling up again and Sabesp has finished a series of quick-fix infrastructure projects that should help it weather prolonged droughts going forward. Analyst Damien Courvalin and team wrote: The rising probability that markets may need to adjust through “operational stress”, when surpluses breach capacity, leaves risks to our forecast as skewed to the downside in coming months, with cash costs near $20/bbl. Republican front-runner Donald Trump, staying with his insistence that the families of the California attackers knew what they were up to, blamed “political correctness” for people being unwilling to finger Islamic terrorists in the U.S.
Iron ore prices sank this year as the slowdown in China hurt demand while the top suppliers including BHP Billiton Ltd. and Rio Tinto Group in Australia and Brazil’s Vale SA boosted low-cost output. The National Front made gains in the first stage of French regional elections that were a referendum of sorts on the Paris terror attacks and immigration policies.
Ibe Kachikwu, after Iran said it would not consider any production cut until it restores output scaled back for years during sanctions on the country. More seaborne supply is due to commence this week as billionaire Gina Rinehart’s Roy Hill mine ships its inaugural exports from Australia’s Port Hedland. HSBC re-iterated its view that Brent crude will average $60 per barrel in 2016: On our forecasts, non-OPEC supply growth will slow from 2.3mbd in 2014 to 0.9mbd in 2015, before turning negative in 2016… the oil market rebalancing story remains intact.
The Bank for International Settlements, in its quarterly report, said global regulators should be able to raise required leverage ratios for banks to as much as 5 percent from the current 3 percent without stifling lending. Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision in November 2014 to maintain output and defend market share against higher-cost U.S. shale producers. Last year, amid the worst drought in eight decades, Sabesp reduced pressure on pipes in a bid to save water, and it hasn’t increased the pressure since. Official data showed China’s steel industry shrank further last month. “A strong build in inventories and weak steel markets continued to weigh on the iron ore market,” ANZ said in a note on Monday. “With miners having ample cargo to sell, the prospect of sub-$40 a ton prices this week looks likely.” Spot ore with 62 percent content delivered to Qingdao retreated 1.8 percent to $40.03 a dry ton on Friday, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to 2009.
Kachikwu disclosed that the group considered cutting production but decided that a reduction “even of five per cent” wasn’t likely to push prices higher if non-OPEC producers, which make up about two-thirds of global production do not join in cutting. In October 2014, 60 percent of residents in South America’s biggest metropolis said their water had been cut off at least once in the previous month, according to pollster Datafolha.
The raw material traded as low as $10.51 in 1988, when annual benchmark contracts were negotiated between the largest miners and steel producers, according to data from the International Monetary Fund. A Orbital ATK rocket launched on a supply flight to the International Space Station, the first successful commercial space venture since back-to-back failures by Orbital and Elon Musk’s SpaceX. In the five months through Nov. 30, rainfall over Cantareira, the reservoir that supplies drinking water for 6 million people, has been 77 percent more than the year-earlier period and 18 percent above the historical average, according to Sabesp. The opposition to President Nicolas Maduro appeared to be on its way to winning a majority of National Assembly seats in economic basket-case Venezuela. At the meeting, Kachikwu said the demand for OPEC crude was expected to rise by 1.2 million barrels per day to average 30.8 million barrels per day for the year 2016 leading to a more balanced market.
Kachikwu who is also head of Nigeria’s delegation to the 168th Ordinary OPEC meeting made this assertion while addressing the OPEC Ministers Conference in Austria, Vienna. It’s still drawing on dead reserves to supply clients, but it will probably return to normal water use by February, Kelman said. “Before, we didn’t have reason for this back-up infrastructure,” he said. “Now, we’ve had to anticipate some works that wouldn’t have been ready until 2025.” Most of the market “doesn’t have any ceiling,” Iraqi Oil Minister Adel Abdul Mahdi told reporters in Vienna. “Americans don’t have any ceiling. He noted that a balanced and stable market would be of crucial importance in the years ahead to ensure continued investment in the industry as it gears up to meet the world’s burgeoning energy needs. The OPEC Conference president stated that the conference was centered on enhancing market stability which would benefit all stakeholders and contribute to global economic growth, stressing that this could be achieved only through the concerted effort of all stakeholders.
Dialogue and collaboration with consumers, non-OPEC producers, oil companies and investors are essential in reaching our common goal of a more orderly oil market. OPEC has also held bilateral dialogues with Russia and China this year, and later this month the OPEC-India Energy Dialogue would have its first meeting,” Kachikwu stated.
Kachikwu maintained that OPEC remained committed to do its part in protecting the environment and supporting sustainable development, adding that OPEC and its member countries were taking part in the climate change negotiations in Paris with the goal of full, effective and sustained implementation of the United Nations Framework Convention on Climate Change. According to LCCI, the international price of crude oil, which is currently trending at a six- year low of $40 per barrel, may crash further when Iran begins to enjoy its international pardon by pumping more oil into the already saturated market. The naira exchange rate is under pressure so is the foreign reserve; fiscal stability of the federal and state governments is at risk, as reflected in the inability of many public sector institutions to meet their financial obligations to contractors and civil servants. Capital flow reversals have intensified, manifesting especially in steady declines in the stock market. “The implications of this scenario for the macro economy are quite profound and unsettling. According to them, as the market continues to await the 2015 appropriation bill to gauge fiscal policy direction of the administration, the current monetary policy direction has only shown a preference for boosting domestic credit growth to stabilising price level.
For the analysts at Afrinvest Securities Limited, the realities of funding the 2016 budget may ultimately lead to devaluation before the second half of 2016, which may signal a turn of market sentiment. The analysts told The Guardian at the weekend that more realistic drivers of sentiment that may materialise in the short to medium term and garner investor confidence, especially for equities include effective articulation of a fiscal plan by the economic team to reflate the economy with key infrastructural projects. The Head of Research, Ayodeji Eboh, said the projects must be in transport, power, support for small businesses, domestic agriculture and agro-based industries, reduction in government overhead and removal of unproductive spending such as subsidy. “It is our opinion that the current equities market condition may persist with pockets of opportunistic value seeking position that may guarantee short-term market gains, which may not be sustained until any of the anticipated fiscal and monetary signals comes into force,” they said.