Posted by The PM News on
World oil prices sank today below $90 as the raging global recession took a further toll and the outlook was bleak for an increase in energy demand.
World oil prices sank today below $90 as the raging global recession took a further toll and the outlook was bleak for an increase in energy demand.
In afternoon trade in Asia today, New York's main contract, light sweet crude for delivery in November, was down 2.95 dollars to 87.11 dollars a barrel after climbing 2.25 dollars to 90.06 at the close of trading on the New York Mercantile Exchange on Tuesday.
The price for November delivery for the Brent North Sea crude, the type that Nigeria produces, eased $2.67dollars to 81.99 dollars after rising 98 cents to 84.66 Tuesday in London .
'It's all doom and gloom on the demand side,' said Tony Nunan, a manager with Mitsubishi Corp' international petroleum business in Tokyo . 'The economy looks like it's going to get worse before it gets better.'
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The sinking oil prices may trigger panic in Aso Rock as it prepares the budget for 2009. Although it is being speculated that the estimate may be based on an oil price of $62.5 per barrel, no oil trader knows for sure, whether the prices will ever stabilise at $80 or above or below. In July oil peaked at $147. The implication of sagging oil prices is that the spending plans of all Nigerian governments for next year will be in serious jeopardy, spelling grave socio-economic crisis for Nigeria 's 140 million people.
The spreading financial crisis wrought further havoc this morning as Asian shares sank further after the Dow closed at a five-year low overnight. A vicious downward spiral was reinforced by fears of a deeper credit crunch leading to severe recession.
Japanese shares plunged 9.38 percent, the biggest loss in more than two decades, while Australian shares closed down 5.0 percent and South Korean stocks ended 5.81 percent lower.
In Nigeria, despite the announcement that six big banks are willing to shell N600 billion into the market, early trading today still saw stocks of blue chip companies, such as Chevron, Mobil, Total, Nestle sliding. But Nigeria Breweries whose price has faced consistent pressure since it peaked at N52 weeks ago, increased by 54kobo to inch higher from yesterday's price of N44.40. Ashaka Cement also made some gains in early trading today. But the value of stocks traded was still below N3 billion, compared to months ago, when trading was averaging N10-N12billion daily.
Apart from the declining stock market, of concern to Nigeria 's rich was the news out of Britain today that the high street banks where they kept their money are facing serious liquidity crisis. Such was the intensity of the credit malaise and the cash crunch that the British government today part nationalised eight of the banks and also announced a bail out worth 50 billion pounds
The package also includes a 200-billion-pound credit line for banks including
Royal Bank of Scotland , HSBC and Barclays, the Treasury said in a statement.
The government said it would use up to 50 billion pounds of taxpayers' money to buy major stakes in the banks, which also include HBOS, Lloyds TSB, Standard Chartered, Abbey and Nationwide Building Society.
'Following discussions convened by HM Treasury… major UK banks and the largest building society have confirmed their participation in a government-supported recapitalisation scheme,' the statement said.
Finance minister Alistair Darling said that the move his Labour government was making was a bold measure in response to 'extraordinary times.'
He told Sky News: 'The taxpayers' interest is being protected. I'm very clear that in return for all this, the taxpayer has got to see some upside.'
Chancellor of the Exchequer Darling said he still did not 'rule anything out' but he said the bailout package 'will go a long way.'
He denied that he had dithered, which critics say caused bank shares to plunge in London trading since Monday amid uncertainty over the government's intentions.
'I wanted to announce it when the time was right, when we had got everything sorted out, we had a scheme that worked and the big banks were signed up to it,' Darling said.
'And we actually finished these discussions only a few hours ago.'
Shares in RBS, Barclays and Lloyds TSB had plummeted in trading Tuesday.
RBS, which owns NatWest, was worst-hit, plunging more than 39 percent, while Barclays was down just over nine percent and Lloyds TSB fell almost 13 percent.
Tuesday's losses took the collapse in RBS' stock to about 80 percent in the year since the credit crunch began with the collapse of the US subprime home loan market.
Just 12 months ago, RBS was riding high, leading a consortium in an attempted 100-billion-dollar takeover of Dutch bank ABN Amro.
London ‘s FTSE 100 index of top shares fell 1.64 percent to 4,529.64 points at the start of trading on Wednesday immediately after the announcement of the rescue plan.
Britain has already fully nationalised two British banks since the credit crunch began a year ago - Bradford and Bingley and Northern Rock.
Many Nigerians keep bank accounts in Britain and other foreign countries and indications that many foreign banks are not so healthy, have triggered some panic among the rich Nigerians.
Jubilee 2000, a UK based NGO said in 1999 that an estimated $55 billion was banked abroad by Nigerians as at that year. In recent times, the EFCC said close to $400 billion of oil money was stolen, with most of it kept abroad. Of the loot, about $1 billion was recovered from the General Sani Abacha family alone in the last eight years