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Why Brent crude may slide to $35 per barrel

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The rebound in crude oil prices may be short-lived, as the oil market fundamentals appear to be turning bearish once again, with the likelihood of Brent crude slipping back to $35 per barrel in the short term, over uncertainty in demand recovery and returning production from the United States and Libya.

Despite the recent optimism that output cuts from OPEC+ and curtailments in North America will combine with demand recovery, Goldman Sachs warns that there are four key reasons why oil prices might drop in the coming weeks.

In early May, Goldman Sachs had predicted that oil demand could rebound enough to exceed supply by the end of May. However, now the consumption forecasts appear ambitious and the demand recovery is expected to be slow and still highly uncertain in the short term, especially due to low returns from refining.

The other 3 key reasons for a predicted halt in oil rebound are the resumption of production by US shale and Libya, prices closing in on levels where Chinese opportunistic oil purchase would slow, and a still massive 1 billion barrel of crude outstanding in global oil inventories.

Libya has confirmed its plans to export crude produced at two of its largest oilfields again, after production had been halted for almost 6 months as the North African country’s output, which was negatively impacted by conflicts, was getting back to revival.

Also, some US shale producers are bringing back shut-in production this month. The US inventory could again be influential this week, with shale producers coming back.

Goldman Sachs said that with OPEC’s latest output cut already overpriced, the forecast is that there will be reduction in prices in coming weeks with the short term forecast for Brent crude at $35 per barrel as against the spot prices of $43 per barrel. Despite the oil price surge in May, the poor refining margins and the recent sharp decline in US crude bases have given rise to bearish outlook.

Morgan Stanley warned that oil prices might have risen too fast too soon, as the market was focused on supply cuts in order to deal with the oil glut. They said that the global oil demand may not return to pre-COVID-19 levels before the end of 2021.

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President Buhari suspends Twitter operations in Nigeria

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Federal Government has reportedly suspended, indefinitely, the operations of Twitter, the microblogging and social networking service, in Nigeria.

This was disclosed by the Minister of Information and Culture, Alhaji Lai Mohammed, via a statement issued by the Ministry’s spokesperson, Segun Adeyemi on Friday.

The Minister cited the persistent use of the platform for activities that are capable of undermining Nigeria’s corporate existence.

“The Federal Government has also directed the National Broadcasting Commission (NBC) to immediately commence the process of licensing all OTT and social media operations in Nigeria,” the statement read.

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Nigeria signs MoU with Niger Republic on petroleum products transportation, storage

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The Federal Government has signed a Memorandum of Understanding (MoU) with Niger Republic on the transportation and storage of petroleum products.

This was disclosed by the Ministry of Petroleum Resources via its Twitter handle on Thursday.

It tweeted, “Nigeria, Niger Republic Sign MoU on Petroleum Products Transportation, Storage. NNPC Pledges to Support SONIDEP on Capacity Building.”

The MoU was signed by the GMD NNPC, Mallam Mele Kyari and the Director General of SONIDEP, Mr. Alio Toune under the supervision of the two countries’ Ministers of State for Petroleum, Çhief Timipre Sylva and Mr. Foumakoye Gado, respectively with the Secretary General of the African Petroleum Producers Organisation (APPO), Dr. Omar Farouk Ibrahim in attendance.

Sylva explained that the development is another huge step in developing trade relations between both countries.

He said, “This is a major step forward. Niger Republic has some excess products which needs to be evacuated. Nigeria has the market for these products. Therefore, this is going to be a win-win relation for both countries.”

What you should know

Following bilateral agreements between Nigeria’s President Muhammadu Buhari and President Mahamadou Issoufou, talks have been on-going between two countries for over four months – through the Nigerian National Petroleum Corporation and Niger Republic’s National Oil Company, Societe Nigerienne De Petrole (SONIDEP), on petroleum products transportation and storage.

Niger Republic’s Soraz Refinery in Zinder, some 260km from the Nigerian border, has an installed refining capacity of 20,000 barrels per day. Niger’s total domestic requirement is about 5,000bpd, thus leaving a huge surplus of about 15,000 bpd, mostly for export.

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House of Reps to support full aviation reform

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The House of Representatives has promised to support total reforms in the aviation industry through legislation, as it appeals for active participation of stakeholders in public hearings.

This was disclosed by the Speaker of the House of Representatives, Femi Gbajabiamila, via his Twitter handle on Tuesday.

According to him, the House has identified that the aviation industry is a key contributor to the growth of the country’s economy and through legislation it would do all it can to develop the industry.

During the opening of a 3-day public hearing session on six aviation-sector bills by the Committee on Aviation, he explained that the draft legislation would make the sector more effective and efficient.

He said, “It is imperative to note that the development of our aviation industry is an added advantage to the growth of our economy. It is in this vein that the House of Representatives will continue to support total rehabilitation and upgrading of our airports and allied services.

“The consideration of these Bills during this Public Hearing is a testament to our commitment to give new life to the aviation sector and make our airports to be a better non-oil revenue-generating sector as is witnessed in other advanced economies.”

The Speaker appealed to the public and interested parties to honour invitations to House committee public hearings so that they can share ideas on how to make critical sectors deliver optimally.

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