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Oil rises about 1% on concerns about return of Saudi output

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Oil rises about 1% on concerns about return of Saudi output

…Slips on Tuesday***

Oil ended about one per cent higher on Monday after a volatile trading session as traders focused on when Saudi Arabia would be able to restore full output, following the Sept. 14 attack on its facilities.

Brent futures gained 49 cents, or 0.8 per cent to settle at $64.77 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 55 cents, or one per cent to settle at $58.64.

“We’ve seen futures trade on both sides of unchanged today.

“The market is hesitant to drive too much higher at this point until it gets more facts.

“But I think the bullish news outweighs the bearish news and that is why we are up at the end of the day,’’ said Phil Flynn, an analyst at Price Futures Group in Chicago.

Brent futures started the session at a high of $65.50 on a report in the Wall Street Journal that it could take Saudi Arabia months longer than its Aramco Oil Company anticipates repairing damage from the attacks.

The global benchmark, however, fell to a low of $63.53 after Reuters reported Saudi Arabia could restore production by early next week.

A source briefed on the latest developments told Reuters that Saudi Arabia has restored more than 75 per cent of crude output lost after attacks that knocked down 5.7 million barrels per day, or more than half of the kingdom’s oil production and will return to full volumes by early next week.

“Although it’s not a foregone conclusion that response against Iran will occur, the uncertainty about what that may entail is keeping a level of risk premium in prices,’’ said Anthony Headrick, Energy Market Analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota.

Also read:  Iran Seizes Another Tanker for Allegedly Smuggling Fuel

Analysts projected U.S. inventories will likely remain below the five-year average in coming weeks as the country boosts exports to help fill the Saudi void.

Tension in the Middle East has escalated since the Saudi attack.

The Pentagon has ordered additional U.S. troops to be deployed in the Gulf region to strengthen Saudi Arabia’s air and missile defences.

Britain believes Iran was responsible for the attack and will work with the U.S. and European allies on a joint response, Prime Minister Boris Johnson said.

The U.S. and Saudi Arabia have also blamed Iran, which denies responsibility.

In a move that could cool tensions, Iran said the British-flagged tanker, Stena Impero, is “free to leave’’.

Iran seized the ship on July 19, two weeks after Britain detained an Iranian tanker off Gibraltar.

In the meantime, oil prices eased on Tuesday as weak manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand and away from uncertainty around supply disruptions in Saudi Arabia.

Brent crude futures LCOc1 fell 40 cents to 64.37 dollars a barrel by 0624 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 were at 58.31 dollars, down 33 cents.

“The demand side of the equation is back in focus,” said Michael McCarthy, senior market analyst at CMC Markets in Sydney, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.

“That’s why we’re seeing a little bit more (downward) pressure on Brent than West Texas at the moment.”

Still, oil prices remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia’s largest oil processing facility that halved output in the world’s top oil exporter.

Reuters reported that Saudi Arabia has restored more than 7 5 per cent of crude output lost after the attacks on its facilities and will return to full volumes by Sept. 30,

But the Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.

“Conflicting headlines lead to asymmetric conclusions, which have immobilized price action and investor risk taking,” Mike Tran, a commodity strategist at RBC Capital Markets said in a note.

An increase in U.S. oil exports to Asia to replace Saudi crude and a reduction in U.S. imports from Iraq meant that crude inventories in the United States could be lower than previously expected, he said.

European powers – Britain, Germany and France – backed the United States in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.

Meanwhile, a preliminary Reuters poll found on Monday that U.S. crude oil and distillate stockpiles were expected to have dropped last week.

Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to Sept. 20.

The poll was conducted ahead of key inventory reports from the American Petroleum Institute, an industry group, to be released on Tuesday and from the Energy Information Administration on Wednesday.

 

 

 

Economy

FG Threatens To Open Borders for Cement Importation Over Price Hike

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Palpable fear has gripped cement manufacturers following the Federal Government’s threat to throw open the nation’s borders for cement importation if the product manufacturers fail to bring down the cost.

The Minister of Housing and Urban Development, Mr Ahmed Dangiwa issued the threat on Tuesday in Abuja at a meeting with Cement and Building Materials Manufacturers.

The meeting was summoned to address the astronomical increase in the cost of cement nationwide.

The minister expressed concerns that in the past couple of months, the country had witnessed a recurring alarming increase in the prices of cement and other building materials.

“Clearly, this is a crisis for housing delivery. An increase in essential building materials means an increase in the prices of houses.

“We are not the only country facing this challenges, many countries are facing the same type of challenges that we’re facing, some even worse than that.

“But, as patriotic citizens, we have to rally round the country when there is crisis, to ensure that we do our best to save the situation,” he said.

The minister added: “Honestly speaking, we have to sit down and look at this critically and know how you should go back and think of it.

“The government stopped importation of cement in other to empower you to produce more and sell cheaper

Bags of cement

“Otherwise the government can open the borders for mass importation of cement, the price will crash, but you will have no business to do”.

Dangiwa said the reasons given by cement manufacturers for the price increase – high cost of gas and manufacturing equipment – were not enough for such astronomical pricing.

He expressed his displeasure at the position of  Cement Manufacturer Association of Nigeria (CEMAN) that the association “does not interfer with the pricing of cement”.

He said the association should not just fold  its arms when things were going wrong.

“One person cannot be selling at N3500 per bag and another selling at N7000 per bag and you cannot call them to order.

“The association is expected to monitor price control, otherwise the association has no need to exist,” he said.

Earlier, Mr Salako James, Executive Secretary, CEMAN, said the housing policy of the administration of President Bola  Tinubu was laudable and every responsible Nigerian has to key into it.

He, however, identified some areas of concern and appealed to the government to look into them to tackle the issue of cement pricing.

Salako identified the challenges of gas supply to heavy users like the cement industry and urged the government to create a window whereby gas will be bought with Naira instead of dollar.

He also complained about the distribution channel, stressing tha there was a great difference between the price from the manufacturers and the market price.

He, therefore called for government intervention to help stabilise the situation and bring sanity to the economy.

At the end of the meeting, the minister directed that a committee should be constituted to review the situation and come out with implementable resolutions that would benefit the common Nigerian.

The three major cement producers, Dangote Plc, BUA Plc, and Lafarge Plc were represented as well as other industry stakeholders.

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Economy

Cement Price Can Be Lower Than FG, Manufacturers’ Projection — Association 

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…Warns that high price could lead to corner-cutting and building collapse

The National Association of Block Moulders of Nigeria (NABMON) says the agreement between the Federal Government and three major cement manufacturers that a 50kg bag of cement, for now, is not supposed to sell for more than N7,000 to N8,000 is faulty.

The National President, Mr Adesegun Banjoko, said this on Tuesday in Lagos.

Recall that the parties, at a meeting on Monday, said that the ideal price of  a 50kg bag of cement for now should be between ₦7,000.00 and ₦8,000.00 depending on location.

They agreed that the current higher prices of cement in parts of the country were abnormal.

The main manufacturers of cement in the country are Dangote Plc, BUA Plc and Lafarge Plc.

According to Banjoko, there is no reason for the price of cement to be sold even at the projected prices, since limestone, which is a key ingredient, is readily available in Nigeria.

He expressed fears that the high price would lead to corner-cutting and building collapse.

The NABMON president expressed the belief that the government and manufacturers could do better and offer lower prices.

Bags of cements

He suggested a reduction or elimination of customs duties on other imported materials used in cement production, adding that this would incentivise manufacturers to lower their prices.

He, therefore, proposed a target price of ₦3,500 to ₦5,000 per bag.

Banjoko said, “There are three issues that make me disagree with the government and the main manufacturers.

“First, limestone is sourced in Nigeria; agreed they have some few other materials they bring in from abroad.

“But if the government is really concerned about life and property lost to building collapse, they should either remove custom duties on such items or reduce them by half to encourage the manufacturers to come down to between N3, 500 and N5, 000.”

He also advised the government to temporarily halt road construction projects that use cement.

Banjoko said that this would free up available cement for vital projects and potentially reduce demand, leading to lower prices.

The NABMON president warned that the high price of cement had added to the existing tensions in the country.

He urged the government to act cautiously with essential commodities like cement, emphasising its impact on public well-being.

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Economy

NGX: Bullish Sentiment Persists, Investors Gain N329bn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Unilever Nigeria Plc, Julius Berger lead Losers’ table 

Bullish sentiment persisted on Thursday at the Nigerian Exchange Ltd. (NGX) equity market, as the market indices rose by 0.58 percent.

Specifically, investors gained N329 billion or 0.58 percent, as the market capitalisation closed at N56.961 trillion, as against N56.632 trillion recorded on Wednesday.

The All-Share Index also appreciated by 0.58 percent or 601.72 points to settle at 104,100, compared to 103,498.28 posted in the previous session.

As a result, the Year-To-Date (YTD) return rose to 39.22 percent.

Continuous buy interests in the shares of BUA Cement, BUAFoods, and Geregu kept the market in the positive terrain.

A total of 284.49 million shares valued at N6.91 billion were exchanged in 8,168 deals, as against 426.86 million shares valued at N12.11 billion exchanged in 8,654 deals.

However, analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 42.89 percent.

Guaranty Trust Holding Company(GTCO) led the activity table in volume and value with the trade of 56.61 million shares worth N2.22 billion.

Transcorp followed with 33.17 million shares valued at N418.31 million, while United Bank of Africa(UBA) traded 18.38 million shares worth N442.96 million.

Also, Mutual Benefits Assurance sold 16.76 shares valued at N11.48 million and AXA Mansard traded 12.51 million shares worth N75.57 million.

On the gainers’ table, University Press Ltd.(UPL) led in percentage terms of 9.96 percent to close at N2.87, followed by Juli Plc by 9.84 percent to close at N1.34 per share.

Mutual Benefits gained 9.38 percent to close at 70k, Daar Communications rose by 8.82 percent to close at 74k, while Honeywell Flour garnered 7.50 percent to close at N4.30 per share.

Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

Conversely, Unilever Nigeria Plc led the losers’ table by 9.80 percent to close at N16.10, Julius Berger lost 9.64 percent to close at N50.60, while Morison Industries Plc shed 9.60 percent to close at N2.23 per share.

May & Baker Nigeria Plc depreciated by 6.52 percent to close at N6.45 and National Salt Company of Nigeria (NASCON) dropped 5.37 percent to close at N59.04 per share.

Market breadth closed negative with 26 declining stocks outnumbering 23 advancing ones.

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