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Oil price hits fresh post 2009 lows as glut grows

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Oil prices resumed their slide on Tuesday, with U.S. crude falling below $37 per barrel for the first time since early 2009, amid fears the world was running out of capacity to store crude as a global glut intensifies.

The global oversupply is being compounded by OPEC’s failure last week to agree a production ceiling, with members Iran and Iraq promising to ramp up output and exports next year.

Benchmark Brent and WTI futures both fell more than 6 percent on Monday, and on Tuesday they hit fresh lows last seen during the credit crunch of 2008/09. Brent futures were down 60 cents at $40.13 a barrel by 1315 GMT. U.S. crude was trading at $36.86 a barrel, down 79 cents from its last settlement.

“The lower levels are largely the result of a renewed focus on fundamentals now that the bulls’ hope for an OPEC cut is off the table,” JBC Energy said in a note. The failure to agree production levels means OPEC core members are readying for new battles for share in the market already heavily oversupplied and consuming almost 2 million barrels per day less than it is producing.

“OPEC has lost control of the oil market and unless something fundamental changes that causes demand to overtake the oversupply in the market, the path of least resistance is the 2008 lows of $35-$38,” said Michael Hewson, chief market analyst at CMC Markets. If Brent falls below $36 per barrel, it would reach levels last seen in 2004 at the start of the so-called commodities super cycle.

Banks such as Goldman Sachs have said oil could fall to as low as $20 per barrel as the world might run out of storage to place unwanted crude. World oil stockpiles are at a record, according to the International Energy Agency.

In yet another indication of fierce market battles, trading sources said Saudi Arabia was shipping more crude oil to Asia over the last two months of the year.
On the demand side, China’s crude oil imports for the first 11 months of the year rose 8.7 percent to 6.61 million barrels per day, with November crude imports growing 7.6 percent from the same month a year ago.

China’s November sales of new vehicles jumped 17.6 percent over the same period. With crude prices near record lows, China is seen as likely to double its strategic oil purchases in 2016, adding 70-90 million barrels to its strategic petroleum reserves (SPR).

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BSE upgrades online investor access

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A recent BSE opening bell function.

Botswana Stock Exchange Limited (BSEL) will this year introduce a new clearing and settlement system, as part of efforts to improve operations of the bourse.

Speaking at the seventh opening bell ceremony, Chief Executive Officer, Thapelo Tsheole said the development will help improve liquidity and risk management. In addition, the new settlement system replaces the 2008 system while fast tracking introduction of security borrowing and lending, management settlement guarantee fund, as well as identifiers for companies and instrument.

BSEL has already awarded a contract to a Swedish company to implement the system which is also expected to digitalize Initial Public Offering (IPO), allow electronic voting for listed companies during annual general meetings (AGM) for absent shareholders.

The project, which is expected to take eight months once the two parties sign the deal, is part of efforts to have more online investors access for BSEL. Tsheole also revealed that BSEL website will undergo a revamp this year, allowing it to be more analytic, live feed shares, as they trade.“The tender is already out for the website and mobile application. It is a project that we had hoped to implement last year but because of logistic problems, we could not do it,” said Tsheole.

BSEL further plans to introduce two data display screens at CBD and at the stock exchange.“These will assist with information sharing and keep the market updated,” said Tsheole. Meanwhile, BSEL will not change its Automated Trading System (ATS) until 2022, according to Tsheole.“The system supports our strategy to grow the market and increase the average daily turnover levels to 18.0million per day by 2021,” said Tsheole.

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BSE complies with reporting guidelines

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Botswana Stock Exchange Limited (BSEL) has become the 5th bourse in Africa to comply and publish Environment, Social and Governance (ESG) reporting guidelines.

The development comes a year after BSEL became a partner exchange of the United Nations Sustainable Stock Exchange (SSE) Initiative.“The BSE made a commitment to publish guidance on ESG Reporting. This commitment has been fulfilled.“

We are the 42nd among the 81 SSE Partner Exchanges globally and the 5th in Africa to do this,” said Kgotla Segwe, Market Development Specialist at Botswana Stock Exchange Limited.
Other stock exchanges that have complied with the SSE initiative on the continent are from South Africa, Nigeria, Morocco and Egypt.

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