Connect with us

Business

Oil price hits fresh post 2009 lows as glut grows

Published

on

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).

Continue Reading
Comments

Business

‘Manufacturing holds key to economic growth’

Published

on

Barclays bank’s economist Naledi Madala has urged the country to consider manufacturing, as a key tailwind to drive the economy and reduce inequality.

She was speaking at a gathering organised by the bank which focused on economic outlook for 2019. “We should not make a mistake of leapfrogging without manufacturing,” said Madala, lamenting that the country’s diversification remains a pipeline dream, as the diamond is still the economy’s mainstay. She bemoaned that mining activities in the country could not spring forward diversification, though non-mining GDP has been steady over the years.

“Extractive industries are not good stepping stones for diversification, the sector does not prepare us for the next step,” said Madala at the Barclays’ Economic Outlook Forum Review 2019. The economist further noted that government should confront head-on challenges of productivity and competitiveness to attract the much needed Foreign Direct Investment (FDI). Though diversification efforts continue to hit a brick wall, Madala said the country should expect increased activities in the mining sector hinged to ramp up in coal production in the year ahead.

She also implored government to consider a welcoming attitude towards foreign investors and generous tax incentives to businesses that set up in the country. Madala is also upbeat that the use of public private partnership model could also help diversify the economy coupled with privitisation. “Privitisation will offer opportunities for growth, through the renewed optimism from government, as business confidence has improved,” said Madala.

She implored the government and the business community to access what is going to drive and hinder growth highlighting that key headwinds to growth are income inequality, diversification challenge and productivity, among others. “The pace of poverty reduction has slowed down, while income inequality goes up,” said Madala

Continue Reading

Business

MINISTER BEWAILS BAD REPAYMENT BY YOUTH

Keikantse Lesemela

Published

on

Minister of Youth Empowerment, Sports and Culture Development, Tshekedi Khama has told parliament his ministry continues to face challenges on the repayment of Youth Development Fund (YDF) loans.

Recently presenting the budget to Parliament, Khama said this financial year the ministry has received a total of 2582 YDF applications and approved 983of them to the value of P98 million. He said the programme attracts a high level of interest from youth but the ministry is only limited to funding a maximum of 1200 youth projects annually due to budget limitations.

“However the greatest challenge for the Fund is the repayment of the loan component by the majority of the youth businesses. The youth have advanced number of challenges for this including high rentals for operating spaces, low market access owing to tight competition and limited production capacities,” said Tshekedi, adding that they continue to pursue beneficiaries to repay the loans.

Out of the 919 businesses funded 1058 jobs have been created. The minister highlighted that disbursements of funds will continue to be undertaken until the end of the financial year. “The YDF is currently under review in line with the pronouncement made by the President, Dr Mokgweetsi Masisi in the State of the Nation Address, to improve beneficiaries through training, and encourage consortia and cooperatives,” said Tshekedi.

The ministry assists YDF beneficiaries in marketing their products and services through fairs and exhibitions. The ministry also runs entrepreneurship-training seminars for youth and in the past year 3692 young people were trained. Over 600 youth businesses attended fairs and exhibitions to market their products and services. Currently the ministry is collaborating with Local Enterprise Authority (LEA), First National Bank Botswana and Citizen Entrepreneurial Development Agency (CEDA) on training in entrepreneurship development and mentorship of YDF beneficiaries.

Continue Reading

Trending