The OPEC production cut agreement has been dominating the headlines for the last six months, and now Iraq is claiming that the cuts are being measured improperly
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The OPEC production cut agreement has been dominating the headlines for the last six months, and now Iraq is claiming that the cuts are being measured improperly
OPEC is a cartel of a diverse group of nations with various bilateral, trilateral and bloc relations among them. OPEC members rarely act in full concert, and seldom keep production-cut pledges. Their game now is playing the market with the possible extension of the cuts beyond June, and they have time until May to try to talk prices up
Silicon Valley VC fund has it's eyes on you, Africa. 500 Startups kicks off its inaugural African Geeks On A Plane tour to look for tech startups.
"We travel by planes, trains, and automobiles to the most exciting international startup scenes with the sole mission of uniting geeks and exploring cross-border opportunities. The result: a lifelong bond with fellow travelers, a wealth of new friends and business contacts in exploding technology markets, and a stronger appreciation for the cultural and economic ties that bind us globally"
Not just theory anymore: With Gates Foundation funding, malarial mosquitoes are being bred in Africa to destroy their own species.
"In Burkina Faso, Mali, and Uganda, the groundwork is being laid for a powerful kind of experiment. A project now under way aims to release mosquitoes that have been genetically programmed to drive themselves and their malaria-causing brethren toward extinction"
U.S. commercial crude inventories may have reached record highs, but the signs of strong drawdowns are already showing, pointing at a much tighter oil market
"Storing crude oil for sale at a later date is no longer profitable, as the futures curve has flattened out in recent weeks, depriving traders of a strategy that has served them well over the past few years. The market “contango,” in which front-month oil contracts trade at a discount to oil futures six months or a year out, has all but vanished"
The nationalization of an economy inevitably creates oligarchs, and these political figures may well be some of the wealthiest individuals in the world
“While we’ve all been inundated with the massive amount of press on the scandals engulfing Brazil’s Petrobras, there are a few that stand out for creating and maintaining some of the world’s most interesting and colorful political leaders, who have grown their wealth through holdings in state-run oil and gas in some cases, and through more direct means in other cases. Four state-run oil wealth stories stand out in today’s world: Russia, Azerbaijan, Kazakhstan, Angola and Brunei”
China Huawei and 10 other state-owned financial institutions selected as pilot scheme members
"China Huawei, together with 10 state-owned financial institutions, have been selected to join a pilot programme that grants more flexibility for offshore funding, a statement issued by the National Development and Reform Commission (NDRC) on Tuesday said"
The non-financial sector in Portugal was 715.8 billion euros in debt at the end of 2016, of which 308.4 billion were attributed to the public sector and 407.5 b
According to a statement by the Bank of Portugal, Portugal’s non-financial sector was in a 715.8 billion euros debt at the end of 2016, of which 308.4 billion were attributed to the public sector and 407.5 billion to the private sector.
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"The banking industry in Kenya is under pressure and is calling for a review of the controversial interest cap law enacted in August 2016. The banks point to the adverse effect the law is having on the sector’s liquidity"
CAPE TOWN – Already a gem of an economic growth story, Ethiopia looks set to add significant shine to its economy through the development of its mineral re
"Already a gem of an economic growth story, Ethiopia looks set to add significant shine to its economy through the development of its mineral resources sector"
“Brokerage commissions and fees on the Nairobi Securities Exchange are brutal. Every time you buy or sell a Kenyan stock, no matter your broker, you will be charged a fee equivalent to 2.1% of the trade’s total value. Of this total fee, 1.76% of the trade value goes to your broker and 0.34% goes toward taxes and statutory fees”
"Brokerage commissions and fees are brutal on the Nairobi Securities Exchange. Here's how much they impact your return and what you can do to beat them"
Recent labor disputes demonstrate employees' leverage over KQ's operations and increase doubts about a return to profitability for the East African airline.
“Try as it might, Kenya Airways (KQ) just can’t seem to power through its many headwinds. Just as the company appeared to have set a course to consistent profits, two recent labor disputes suggest KQ investors better prepare for turbulence”
Three Kenyan stocks with high yields, low debt, consistent track record, and the potential for growth.
“Dividend stocks can provide a great foundation for an investment portfolio. But plunking your hard-earned cash into the share with the highest yield could be a costly mistake. How do you decide which stocks have the best chance of building your wealth over the long-term?”
The Treasury’s quarterly refunding this week will get extra attention.
"Bond traders have been hyper-focused on the monthly U.S. employment report for decades, but in this oddly quiet limbo period in the Treasury market, the traditional economic yardsticks used to gauge value in fixed-income assets may be less important than one crucial intangible: the toughening of the Federal Reserve’s spine"
China and Japan used to game foreign-exchange markets to boost exports, but that’s mostly in the past.
"Every other country lives on devaluation…You look at what China's doing, you look at what Japan has done over the years. They...play the money market, they play the devaluation market and we sit there like a bunch of dummies" Donald Trump on China and Japan
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Zimplats has continued its expansion drive in the country, despite land takeover threats and requirements that it build
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Chance to shine at World Economic Forum 2017 for South Africa's Gordhan, Ramaphosa. President Zuma won't be there. It's not exactly his happy place.
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Despite inequality in South Africa, African migrants go there more than they go to Europe. Just 3% of displaced Africans are in Europe.
"South Africa has the highest number of pending asylum claims in the world, with more than 1 million people waiting to be processed"
According to Indeed data, the number of new oil and gas job postings had inched up at the end of 2016, after taking a dive for most of the year, with sector players struggling to adjust to the new oil price environment and focusing on cost cuts, which are more often than not incompatible with new hiring or even employee retention"
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Oil prices faltered at the start of the second week of the year, as fears set in about a rapid rebound in U.S. shale production. For the better part of two months, optimism surrounding the OPEC deal has buoyed oil prices, but bullish sentiment from speculators are showing early signs of abating, raising the possibility that the oil rally is running out of steam.
WTI and Brent sank more than 2.5 percent in intraday trading on Monday, after a report at the end of last week showed another solid build in the U.S. rig count, the tenth consecutive week that the oil industry added rigs back into the field. Aside from a single week in October, the U.S. oil industry has deployed more rigs in every week dating back to June, a remarkable run that has resulted in more than 200 fresh rigs drilling for oil. The gains in the rig count come even as oil prices have held steady in the mid- to low-$50s per barrel.
At the start of 2017, there are two major dynamics at play occurring at the same time, each pushing in opposite directions on the market. The OPEC deal is slated to take oil off the market, while U.S. drilling is expected to add new supply. The pace and magnitude of each trend will ultimately drive oil prices one way or the other.
On the positive side of the ledger, there are early signs that OPEC members are meeting their commitments. Saudi Arabia said last week that it is lowering its production in January by 486,000 barrels per day, a volume that it promised to cut as part of the November deal. That will take output down to 10.058 million barrels per day, a level that Riyadh was only required to meet as an average over the January to June time period. Cutting to that level ahead of time is a sign of good faith from Saudi Arabia, and increases the chances that OPEC will stay true to its promises.
On top of that, Kuwait’s envoy to OPEC said that Qatar, Kuwait and Oman were also complying with the cuts. In an interview with Bloomberg, Kuwait’s Nawal Al-Fezaia said that those countries already told customers that cuts were imminent. "It’s a good time to do maintenance on oil fields during production cuts," Al-Fezaia said, noting that Kuwait will lower output from 2.89 mb/d in December to 2.7 mb/d by the end of January.
Market analysts paused a bit on news that Iraq’s oil exports from its southern ports on the Persian Gulf hit a record high in December, but the data has no bearing on whether or not Iraq will comply with the agreed upon cuts. "Achieving this record average will not affect Iraq’s decision to cut output from the beginning of 2017," Oil Minister Jabbar Al-Luaibi told Bloomberg in an emailed statement. "Iraq is committed to achieving producers’ joint goals to control the oil glut in world markets."
It is still early but all signs point to a stronger commitment from OPEC to adhere to the specifics of the cuts than market analysts might have given them credit for. That bodes well for a narrowing supply surplus – and ultimately a deficit – as well as falling inventories. In other words, OPEC is succeeding in putting upward pressure on prices.
However, the flip side of the equation is faster drilling from the U.S., where rig counts continue to climb. Oil output, according to EIA weekly surveys, is up roughly 300,000 bpd from summer lows, with more supply expected to come online in the months ahead as drilling picks up pace.
It is unclear, at this point, how rising U.S. supply and falling OPEC output will ultimately balance out. For now, the consensus seems to be tightening conditions in the first half of 2017, with much greater uncertainty in the second half, but that remains to be seen.
What is clear is that oil speculators have built up such a large bullish bet on oil that they have opened up crude to near-term downside risk. According to Reuters, hedge funds and other money managers amassed net-long positions in WTI and Brent equivalent to 796 million barrels in the last week of December, which was nearly double the amount from mid-November. The OPEC deal clearly fueled a huge speculative rush in rising oil prices, which, not coincidentally, corresponded with real gains in crude prices.
But at this point, there are very few short positions left in oil, while a massive volume of long bets have built up. That suggests two things, both of which are bearish for oil: there is not a lot of money left to go long, lowering the chances of further prices gains; and the potential for a correction in prices is very high at this point. Indeed, in the most recent week for which data is available, net-long positions declined a bit, raising the possibility that bullish bets have peaked. All it will take is a bit of bearish news to spark a downturn in prices.
There are a few minor worrying signs for oil prices that could crop up as additional bearish forces in the next few weeks. The U.S. DOE announced on January 9 a "notice of sale" from its strategic petroleum reserve, with plans to sell 8 million barrels for delivery over the course of February, March and April. Meanwhile, Libya is seeing rapid gains in oil exports after the reopening of a key export terminal, with output jumping to 700,000 bpd, according to the latest data, up sharply from the 580,000 it produced in November and the 300,000 bpd it exported before it started restoring output last summer. Moreover, Nigeria – which, like Libya, is exempt from the OPEC deal – is intent on restoring production. It may struggle to do that with the recent shuttering of the Trans Niger Pipeline, potential strikes from oil workers unions and the announcement from the Niger Delta Avengers that attacks will resume this year. In fact, production appears to have declined in December, falling 200,000 bpd to 1.45 mb/d, becau se of some of these issues. But if those problems can be overcome, Nigeria has latent production capacity that could come back online at some point.
And in a sign that there is not a lot of room on the upside, a kerfuffle in the Persian Gulf over the weekend did nothing to affect oil prices. A U.S. Navy destroyer fired three warning shots towards Iranian ships, an incident that in the past would have led to a sharp, even if brief, rally in crude prices. Instead, the markets shrugged off the incident – WTI and Brent sank on the first trading day after the event, on unrelated news. "The market is overbought and under a lot of downward pressure," Bob Yawger, director of the futures division at Mizuho Securities USA Inc., told Bloomberg. "The shots fired at the Iranian boats in the Strait of Hormuz didn’t do anything to the market. A few years ago that would have added a couple dollars to the price."
Link to original article: http://oilprice.com/Energy/Energy-General/Oil-Prices-Running-Out-Of-Reasons-To-Rally.html
By Nick Cunningham of Oilprice.com
Oil prices faltered at the start of the second week of the year, as fears set in about a rapid rebound in U.S. shale production. For the better part of two months, optimism surrounding the OPEC deal has buoyed oil prices, but bullish sentiment from speculators are showing early signs of abating, raising the possibility that the oil rally is running out of steam
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The Dangotes are the exception. Most businesses built by African entrepreneurs are local. African entrepreneurs share advice on how they became successful.
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