Oil rose on Wednesday, set for its largest third-quarter gain in 13 years, after the Iraqi oil minister said OPEC and its partners were considering extending or deepening supply cuts to erode an existing global surplus.
Brent crude futures rose 29 cents to $55.43 a barrel by 0800 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 42 cents at $49.90 a barrel. The oil price is on course for a rise of 15.5 percent this quarter, which would make this year's performance the strongest for the third quarter since 2004.
"An improving macro-economic backdrop should spur oil demand growth over the next couple of quarters and if OPEC increases its adherence to production cuts, higher prices will come," ANZ Research said in a note."All things being equal, we still expect oil prices to test new highs (for 2017) by the end of the year." The Organization of the Petroleum Exporting Countries and other producers are mulling a range of options, including an extension of cuts, but it is premature to decide on what to do beyond March, when the agreement expires, Iraqi oil minister Jabar al-Luaibi told an energy conference on Tuesday.
OPEC and producers including Russia have agreed to reduce output by about 1.8 million barrels per day until March 2018 to reduce global oil inventories and support prices.
Some producers think the pact should be extended for three or four months, others want it to run until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.
But analysts doubt that such an extension would have much of an impact on the overall oil market. "I can't see the market tightening unless OPEC cuts output further next year," Commerzbank strategist Carsten Fritsch said. Georgi Slavov, head of research at commodities brokerage Marex Spectron said he did not expect demand for crude oil to rise significantly in the final quarter of this year, which meant supply would have to be restricted even more tightly.
U.S. crude stocks rose last week while gasoline and distillate stocks decreased, according to the American Petroleum Institute on Tuesday. Crude inventories rose by 1.4 million barrels in the week to Sept. 15 to 470.3 million, compared with expectations for an increase of 3.5 million barrels.
The U.S. Department of Energy releases official data on inventories and refinery activity later on Wednesday.
The Cedi may have relatively held its own against the US dollar for the greater part of this year, but against the Euro and Great Britain’s pound sterling, the cedi’s performance so far has been very woeful – a situation that would bring misery rather than relief to importers.
In the beginning of the year, the Euro was being sold at GH¢4.3755 on the interbank market --where the banks trade among themselves. As at close of trading on Monday, September 18, the Euro’s value was GH¢5.2703, about 90 pesewas extra than it began the year.
The cedi’s struggle against the Euro means that it has so far depreciated about 17 percent against the European Monetary Unit. The worsening performance means that, an importer who exchanged €1,000 for GH¢4, 3755 in the beginning of the year, will now have to part ways with GH¢5, 2703 for the same €1,000.
The local currency’s performance against the Great Britain’s pound sterling is somewhat better compared to the Euro but not any impressive. The cedi’s year-to-date depreciation against the pound on the interbank market is about 14 percent.
The announcement of Brexit and its attendant uncertainties forced the pound to some lows against some major trading currencies across the world. But with the dust surrounding the Brexit beginning to settle, the sterling is regaining its strength and the cedi clearly seems no match despite the cedi’s gains made during the heat of Brexit’s announcement.
On the interbank market as at Monday, September 18, the pound was selling at GH¢5.9749, up from the GH¢5.1591 it was selling at the commencement of the year. The increment represents approximately a 13.7 percent depreciation in the local currency. For an importer of goods from the UK, the exchange rate for £1,000 at the beginning of the year was GH¢5, 1591. But the same £1,000 pound now will exchange for GH¢5, 9749.
As at September 18, the cedi has depreciated against the dollar by 4.5 percent compared to the 4.1 percent it did same period last year.
Not all gloom
According to the UK-Ghana Chamber of Commerce, trade volumes between Ghana and the UK is a little over a billion bounds leaning towards more imports than exports for the West African country.
Nevertheless, while importers from the UK or the 16-member European Union will be hard-hit by the pound and euro fall, exporters will be looking to cash in on the windfall. The development between the cedi and two major currencies will mean that exporters will now be earning more cedis for the same proceeds.
For instance, an artifact exporter to the UK or the EU earning £1,000 or euro, would be getting more for the same amount of pound or euro than he was getting in the beginning of the year. Also, for Ghanaians resident in the UK and the EU, the development will mean that their remittances into the country will fetch more local currency than before.
According to DMA Global, a UK-based payments consultancy firm, formal remittances from UK to Ghana is about US$272 million as at 2015.
China is transforming its sources of energy domestically in a bid to reverse decades of environmental pollution. But the switch to renewable energy has brought about a conundrum: what to do with the jobs and industries that have no future in this new system?
Kenya is one. Its coastline is a national asset for fisheries, tourism, a growing population and economic development. But Amu Coal – a consortium of Kenyan and Chinese energy and investment firms – is set to start building a coal plant on the only part that is untouched by industrial development. The plant is planned to be some 20 kilometres from the town of Lamu on the mainland coast, at the mouth of Dodori Creek.
Quite apart from the unfavourable economic and financing aspects for generating energy from coal, the plant may be Kenya’s single largest pollution source.
The problems should be set out in the Environment and Social Impact Assessment study required by Kenya’s Environment Act and vetted through the National Environment Management Authority. But three key issues are omitted or glossed over by the study. Any one of them should be cause for the environment authority, other arms of the Kenyan government and certainly the public to oppose the coal plant.
Thankfully, opposition is growing.
Key issues against plant
The first is a classic Industrial Revolution, Victorian issue. Toxic pollution. Coal releases a range of toxic substances into the environment. These go into the atmosphere, rain, groundwater, and seawater – and then to flora, fauna and people. These substances are barely mentioned in the assessment study. There are also no detailed estimates on the amounts that could be released and how they could be reduced by mitigating actions. The coal intended for use – initially to be imported from South Africa, and classified as “bituminous”, releases large amounts of toxins, particularly if improperly burned.
The impact study also doesn’t clearly state the full size of the mountain of coal residue left behind after burning –- almost 4km long by 1km wide and 25 metres high. No credible plan for disposing of the waste is presented.
Second is Kenya’s contribution to global carbon dioxide emissions. Under the Paris Agreement on climate change the Jubilee government committed to reduce these by 30% by 2030. The impact study dismisses the carbon emissions from the plant as negligible on a global scale, at only 0.024% of global emissions. But what it attempts to hide is that the emissions of the coal plant alone will double Kenya’s energy sector’s entire CO2 emissions. This at the same time that citizens, businesses and the government are investing in efforts to reduce their carbon footprints, through – for example through wind, solar and geothermal power generation.
The third reason is a chimera of the above –- climate change and toxic pollution combined. It is reasonably certain that sea levels will rise due to climate change. Estimates suggest this could be in the order of half to one metre by the end of this century, and very possibly more. The toxic waste mountain left by the plant will be on Kenya’s flattest shoreline, built on sand. Its base will be maybe 2-3 metres above sea level, and tens to 100m from the shoreline. This is the most vulnerable part of Kenya’s coast where sea level rises, and yet the massive toxic dump is to be placed there.
Part of the impact assessment argues that “the area is remote” so few people will be affected by pollution. Quite apart from the flawed logic that it’s okay to pollute natural wilderness areas, if plans for a major urban development under the LAPSSET project – Eastern Africa’s largest and most ambitious infrastructure project bringing together Kenya, Ethiopia and South Sudan – are concluded, there will be a city of over one million people in the area by 2050.
The report contains nothing about exposure of this number of people to toxic waste. Even the Strategic Environment Assessment for the LAPSSET project, conducted in the last few years, doesn’t include the coal plant in its assessment. The logic is that the plant is “not part of LAPSSET” yet even the simplest understanding of the purpose of both impact assessments and strategic environment assessments is to consider all interacting threats, and particularly the biggest ones, to the environment and people.
Improved standards are undoubtedly needed in Kenya’s Environment Impact Assessment sector. The country will develop, by hook or by crook, with or without a vision for 2030. Strengthening environment and social impact assessment as a tool to facilitate the right sort of development – where currently it’s viewed by business and most government authorities as a pesky bureaucratic step at best – will be one of the single most significant steps the government can take to protect and grow the natural and social assets that secure, healthy and equitable development is founded on.