The price of oil at the international market maintained a slight increase on Thursday, following signs of reopening of economies across the world after weeks of lockdown due to the outbreak of Coronavirus pandemic.
At 2 p.m. yesterday, Brent settled at $25.29 per barrel gaining about $2.75 from the previous week, while WTI crude rose to $17.34 per barrel recording an increase of $2.28 and Bonny Light settled at $16.51 a barrel, gaining $1.66. But other grades of Nigerian crude oil, particularly Qua Iboe crude oil, and Brass River crude oil settled at $19.34, recording a higher increase of $3.26.
Covid-19 pandemic, which started late last year, has drastically affected oil and gas sector leaving the price at record lows, but API reported a smaller-than-expected build in crude inventories as crude storage rose by 10.6 million barrels instead of 13 million barrels.
With some countries including China, Nigeria, South Africa and some parts of the U.S. already planning to ease the lock-down, and gradually reopen their economies even as Gilead Sciences had on Wednesday, raised the hope that antiviral drug, Remdesivir, could help patients heal faster. Pfizer noted that the vaccine could available soon, a development that may have spiked the recent rally in the oil market.
Meanwhile, Anglo-Dutch supermajor, Shell, yesterday, cut its dividend by as much as 66 per cent, a development which reportedly happened last during World War II. Going by Shell’s decision, yearly pay-out to shareholders would fall from $14.9billion to $5.1billion, freeing up about $10billion of capital.
The oil giant’s shares in London dropped by seven per cent early hour of Thursday, failing way below rival BP, which was down 2.2 per cent. Reacting to the development Senior Vice President with Wood Mackenzie’s corporate analysis team, Tom Ellacott, said: “The move is a sensible and prudent action to preserve cash in the face of huge macro uncertainty.
Ellacott stated that the development would reduce Shell’s 2020 cash flow breakeven from $51/bbl to $36/bbl. “A permanent dividend reset could also accelerate the strategic pivot to ‘Big Energy’ through the reinvestment of more retained earnings in the youthful zero-carbon energy sector.
“Shell’s dividend cut has thrown down the gauntlet to the supermajors. BP, Chevron, ExxonMobil and Total are due to pay out US$41 billion of dividends in 2020. Combined pay-outs would fall by US$27 billion of they all cut by 66 per cent,” Ellacott added.
This news was culled from The Guardian Nigeria
