Global stocks were weighed down Thursday, March 9,2017 by a big buildup in U.S. oil stockpiles that depressed crude prices and shares of energy companies in particular. In Europe, the FTSE 100 index of leading British shares was down 0.8 percent at 7,275 while Germany’s DAX fell 0.3 percent to 4,946. The CAC 40 in France was 0.3 percent lower at 4,946. U.S. stocks were poised for a lower opening with Dow futures and the broader S&P 500 futures down 0.2 percent.
Oil reserves grew by 8 million barrels last week, far more than analysts expected, according to a report by the Energy Information Administration. The news triggered a sell-off in energy-related shares and oil futures, with benchmark U.S. crude losing $2.86, or 5.4 percent, to close at $50.28 a barrel, its biggest drop in more than a year. Prices continued to fall, with the benchmark rate down a further 2.3 percent at $49.13 a barrel. Brent was 2.1 percent lower at $52.02 a barrel.
“The consequence of the increase in U.S. oil rigs since mid-May last year has now become alarmingly visible in U.S. crude oil production,” said Bjarne Schieldrop, chief commodities analyst at SEB, the leading Nordic corporate bank. In an interesting twist, Nigeria is introducing a new blueprint that has been designed to comply with demands made by the World Bank and other international lenders who are prepared to fund new energy projects in exchange for oil-sector liberalization.
Privatizing portions of the West African country’s oilfields will “optimize their efficiency and reduce fiscal burden on the government,” according to the plan posted on the Ministry of Budget and National Planning’s official website. To raise government revenues by 350 billion naira, the plan also proposes raising the value-added tax from 5 percent to 15 percent in 2018.
On average, Nigeria has maintained a 55 percent stake in joint ventures with Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA. Combined, the oil majors produce roughly 90 percent of the nation’s crude. In addition, the national government owns just under half of Nigeria LNG Ltd, which runs the biggest liquefied natural-gas plant on the continent.