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Oil price records biggest annual gain since 2009

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Oil prices fell at the weekend but still posted the biggest annual gains since 2009, spurred by the global economic recovery from the COVID-19 pandemic and producers’ restraint.

Brent, Nigeria’s oil benchmark, ended the year up 50.5 per cent, its biggest gain in years, while West Texas Intermediate (WTI) posted a 55.5 per cent gain, the strongest performance for the benchmark contract since 2009, when prices soared more than 70 per cent.

Both contracts touched their 2021 peak in October, with Brent at $86.70 a barrel, the highest since 2018, and WTI at $85.41 a barrel, the highest since 2014.

But during the weekend, Brent crude futures settled down $1.75, or 2.2 per cent, at $77.78 a barrel as WTI crude futures dropped $1.78, or 2.31 per cent, to $75.21 a barrel.

The oil market continues to be highly reactive to developments on the pandemic front, indicating that the industry is not out of the woods yet, but now close to pre-pandemic demand levels.
A Reuters survey of 35 economists and analysts forecast Brent crude would average $73.57 a barrel in 2022, about two per cent lower than the $75.33 consensus in November.

Easing production outages in Nigeria and Ecuador also weighed on prices earlier in the week as Nigeria struggled to ramp up production after a disruptive force majeure declared by Shell, amid ageing upstream infrastructure and sabotage.

Nigeria, going by the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC) is expected to produce 1.683 million bpd in January 2022, but meeting that target would be an uphill task as it has maintained an average of 1.25 million barrels in the last few months.
However, the country appeared to have done a bit better going by the latest data for November, adding over 47,000 barrels per day in that month.

The unimpressive production figures have also negatively impacted the NNPC’s remittances to the federation account and by extension the monies shared by the federal, state and local governments this year.

For example, with a paltry N10.54 billion in November, the Nigerian National Petroleum Company (NNPC) was only able to remit 8.5 per cent of its projected N122.7 billion to the federation account, a joint pool of funds shared by the country’s three tiers of government.

The national oil company has blamed the inability to restart the oil wells shut down in 2020 when OPEC compelled member countries to cut production for the declining production.
But with oil hovering near $80, OPEC, Russia and allies, together called OPEC+, will probably stick to their plan to add 400,000 barrels per day of supply in February when they meet on January 4, four sources told Reuters.

The sources added that this is set to happen as demand concerns raised by the Omicron coronavirus variant eased and oil prices recover.
The alliance at its last meeting on December 2 stuck to the plan for a 400,000 barrels per day rise in January despite fears that a US release from crude reserves and Omicron would lead to an oil-price rout.

OPEC ministers are also set to discuss who will become the group’s new secretary-general to replace Nigeria’s Mohammad Barkindo, who is scheduled to leave at the end of July. Kuwait’s candidate, Mr Haitham al-Ghais, tipped to take over has widespread support, sources have said.

Russian Deputy Prime Minister Alexander Novak said last Wednesday OPEC has resisted calls from Washington to boost output further because it wants to provide the market with clear guidance and not deviate from policy.

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Cryptocurrencies tumble, with bitcoin falling 8% and ether down 9% in the last 24 hours

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Bitcoin prices fell sharply on Thursday night, while ether prices also dived.

Bitcoin plummeted by 8% in the last 24 hours, and trading at $38,524 as of 10:56 p.m. ET, according to CoinDesk data.

Ether, the second-largest cryptocurrency by market cap, dived more than 9%. It was trading at $2,828 as of 10:57 p.m. ET, according to CoinDesk.

The declines in cryptocurrencies follow Wall Street losses on Thursday. The Nasdaq was down almost 5% this week, and the S&P 500 is into its third straight week of losses.

As the 10-year U.S. Treasury yield spiked earlier this week, rising rates have caused investors to shed their positions in riskier assets. The Federal Reserve have also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.

A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.

Bitcoin prices have fallen sharply since November, tumbling over 40% from a high of over $67,500 in 2021.

Some experts warn that the crypto market could be heading toward a downturn soon, as heightened regulatory scrutiny and intense price fluctuations dampened bitcoin’s prospects.

Regulators are cracking down on cryptocurrencies too. China completely banning all crypto-related activities and U.S. authorities are also clamping down on certain aspects of the market.

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Netflix shares fall 20% on slowing subscriber growth

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Netflix reported fourth-quarter earnings after the bell on Thursday. The streamer beat on both the top and bottom lines, but shares plunged more than 20% in after-hours trading, to the lowest levels since June 2020, on slowing subscriber growth.

Here are the key numbers:

Earnings per share (EPS): $1.33 vs 82 cents expected in a Refinitiv survey of analysts.


Revenue: $7.71 billion vs $7.71 billion expected, according to Refinitiv.

Global paid net subscriber additions: 8.28 million vs 8.19 million expected, according to StreetAccount estimates
Netflix added 8.28 million global paid net subscribers in the fourth quarter. Analysts had expected the company to add 8.19 million, according to StreetAccount estimates. But that’s fewer than the 8.5 million subscribers Netflix added in Q4 2020, the same figured it had forecasted for Q4 2021, and its outlook was worse.

Netflix said it expects to add 2.5 million subscribers during the first quarter of 2022, far below the 3.98 million it added in Q1 2021. Meanwhile, analysts had expected 6.93 million in the first quarter, according to StreetAccount estimates.

Netflix said it plans for a more back-end weighted content slate in the first quarter, with big premieres set for March.

But that’s similar to the image Netflix had painted heading into Q4. Netflix and analysts had anticipated a large jump in consumers at the end of 2021 when the company released new TV shows and movies that had been pushed to the back half of the year. During the quarter, for example, Netflix released high-performing content such as “Emily in Paris,” “Don’t Look Up,” “Red Notice” and “You.”

Netflix said increased competition from other companies was one reason for the slowdown, though in the past it had said companies like Apple and Disney wouldn’t materially affect growth.

“Consumers have always had many choices when it comes to their entertainment time – competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering,” Netflix said. “While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.”

Disney and Roku shares also dipped more than 4% in after-hours trading.

Netflix, wanting to attract the 800 million to 900 million households that use either broadband internet or pay-TV, said it’s still early days when it comes to reaching that number.

“It’s definitely frustrating for us, the current slower growth,” co-CEO Reed Hastings said during a pre-taped earnings interview. The company reported 222 million paid memberships in the fourth quarter.

“It’s a dynamic market for sure, it may not be as steady as people think about it in terms of we’re gonna add X number every quarter, every month, every week, but there’s no question that’s the direction the business is going in,” co-CEO Ted Sarandos added.

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IMF proposes $50bn trust fund to help low-income countries

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As the COVID-19 pandemic continues to exert heavy strain on the global economy, the International Monetary Fund (IMF) is proposing a $50 billion trust fund which could help low-income and vulnerable middle-income countries to build resilience and sustainability.

The trust fund is part of IMF’s options for channeling some of the $650 billion Special Drawing Rights (SDRs) issued in August 2021 to countries with strong external financial positions as well as vulnerable countries through a Resilience and Sustainability Trust (RST).

The IMF in a new blog post yesterday, stated that the proposed $50 billion trust fund could help low-income and vulnerable middle-income countries build resilience to balance of payments shocks and ensure a sustainable recovery

It stated that about three quarters of IMF’s membership could qualify for the RST financing, including all low-income countries, all developing and vulnerable small states, and all middle-income countries with per capita gross national income (GNI) below 10 times the 2020
International Development Association (IDA) operational cut-off , or about $12,000.

Nigeria falls within the category of potential beneficiaries as
GNI per capita in the country was reported at $2,157 in 2019, based on the World Bank collection of development indicators, compiled from officially recognised sources.

To qualify for RST support, an eligible IMF member would need a package of high-quality policy measures consistent with the RST’s purpose; a concurrent financing or non-financing IMF-supported programme with appropriate macroeconomic policies to mitigate risks for borrowers and creditors; and sustainable debt and adequate capacity to repay the Fund.

The IMF noted that access to RST financing would be determined case-by-case, based on the strength of reforms and debt sustainability considerations, and was expected to be capped at 150 per cent of IMF quota or SDR 1 billion, whichever is smaller.

It added that RST lending would be part of a broader financing strategy members would pursue to address longer-term balance of payments risks, involving a mix of multilateral, bilateral official, and private financing.

Like the IMF’s highly concessional and currently zero interest rate Trust for low-income countries, the RST’s resources would be mobilised on a voluntary basis from members who wish to channel their SDRs or currencies for the benefit of poorer or vulnerable countries.

The IMF stated: “Even as countries continue to battle COVID-19, it is crucial not to overlook the longer-term challenge of transforming economies to become more resilient to shocks and achieve sustainable and inclusive growth.

“The pandemic has taught us that not addressing these long-term challenges in a timely manner can have significant economic consequences, with the potential for future balance of payments problems.

“Climate change is another long-term challenge that threatens macroeconomic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.

“These are global public policy challenges, and it is the shared responsibility of individual countries and the international community to take timely actions.”

The Fund noted that in a previous blog, it had explained how it was considering options for channeling some of the $650 billion SDRs issued in August 2021 from countries with strong external financial positions to vulnerable countries through a Resilience and Sustainability Trust.
It added that the RST’s central objective was to provide affordable long-term financing to support countries as they tackle structural challenges.

“As we’ve continued to work toward developing the RST, our current thinking on the key design features—which we outline further below—aim to balance the needs of potential contributors and borrowing countries.

“With broad support from the membership and international partners, we hope that the Trust can be approved by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the year’s end,” the IMF stated in the blog post.

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