Economy

Analysts List Factors to Impact Crude Oil Prices This Week

Published

5 years ago

01/06/2020

By Adedapo Adesanya

Despite recording five straight weekly gains last week and achieving an 88 percent rise last month, oil prices are still yet to return to their pre-pandemic levels.

However, this week prices will be decided by a number of factors.

The month of June marks the second month of the implementation of the record cuts signed by members of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC+. It is also a month where producers will meet to decide on the next step in the supply reduction action.

There have been discussions on extending the current level of cuts till the end of the year, but there are worries about Russia’s commitment to deeper output cap than agreed. Oil producers are expected to meet on June 9.

But producers are now mulling the possibility of meeting as soon as this week to discuss whether to extend record production cuts beyond end-June.

Algeria, which currently holds the OPEC presidency, has proposed an OPEC+ meeting planned for June 9-10 be brought forward to facilitate oil sales for countries such as Saudi Arabia, Iraq and Kuwait. Russia has no objection to the meeting being brought forward to June 4.

Last week, Russian Energy Minister, Mr Alexander Novak, met with domestic major oil companies to discuss the implementation of global oil production curbs and the possible extension of the current level of cuts beyond June.

This news actually comes as no surprise because in the past, traders have always had to question Russia’s commitment to any proposed deal. Historically, Russia has been the last major producer to approve production cuts.

Another big reason that will heavily impact on prices this week is the continued tension between the United States and China over plans to impose security laws on Hong Kong by China and the possibility of sanctions from the US.

Last week, President Donald Trump signaled no changes to the trade deal with China despite rising tensions.

During a news conference, Mr Trump said he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the US would pull out of the phase one trade agreement reached with China earlier this year, easing trader concerns for the time being.

Analysts believe that China wants to get its economy back on track and won’t do anything drastic that could derail its recovery, but could as well turn its backs on Phase One of the trade deal.

Sanctions by the US and a retaliation by China could create similar conditions to a trade war. This won’t be good for the global economy especially at a time when it’s just starting to recover from the damage cause by the coronavirus pandemic.

This week, if the tensions between the two heavyweights continue to worsen over the near-term, then this could raise enough uncertainty to encourage crude oil traders to profits and take to the sidelines on fresh worries over future demand which they didn’t do last week.

Traders are also keeping an eye on riots that happened in the United States over the weekend, which have engulfed major cities, leading to the destruction of many business establishments.

The prospect of an extension of curbs by OPEC+ will also help improve crude oil prices because additional reductions in supply will help sustain the rebound in consumption and will help oil to keep rallying.

However, the market has opened this week with both futures pointing south with the Brent Crude trading at $37.76 per barrel while the WTI was down at $35.39 per barrel.

Economy

UBN Property Triggers 0.22% Loss at NASD OTC Exchange

Published

2 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.

It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.

However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.

The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.

At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.

Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.

Economy

Naira Weakens to N1,550/$1 at Official Market, Gains N5 at Black Market

Published

3 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.

Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.

Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.

According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.

Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.

However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.

As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.

Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.

Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.

Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.

Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

Economy

Oil Prices Fall as Trump Announces Changes in US Energy Policies

Published

3 hours ago

21/01/2025

Adedapo Adesanya

By Adedapo Adesanya

Oil prices settled lower on Monday after Mr Donald Trump was sworn in for a second time as President of the United States.

On assumption of office, Mr Trump declared a national energy emergency immediately, promising to replenish strategic reserves and export American energy worldwide.

Consequently, Brent crude futures went down by 64 cents or 0.8 per cent to settle at $80.15 per barrel and the US West Texas Intermediate crude futures depreciated by $1.30 or 1.7 per cent to trade at $76.58 per barrel.

Mr Trump and his allies have signalled they would use the authority to rapidly approve new oil, gas, and electricity projects that typically take years to permit, and during his speech said he plans to unleash new oil and gas development on federal lands while reversing the Biden-Harris administration’s de-growth climate regulations.

Market analysts noted that while many of the executive actions will simply kick off a lengthy regulatory process, they extend by a large degree to the US energy industry, from oil fields to car dealerships.

These also underscore Mr Trump’s determination to reorient federal government policy behind oil and gas production, a sharp pivot from Biden’s efforts to curb fossil fuels.

He also said in his inaugural speech that he would impose tariffs and tax countries and promised an overhaul of the trade system.

Last week, prices rose for a fourth-consecutive weekly gain after the Biden administration imposed sanctions on more than 100 tankers and two Russian oil producers. This led to a scramble by top buyers China and India for prompt oil cargoes and a rush for ship supply.

Meanwhile, dealers of Russian and Iranian oil sought tankers not under sanctions for oil shipment.

While the new sanctions could cut supply from Russia by nearly 1 million barrels per day, market analysts noted that recent price gains could be short-lived depending on Trump’s actions as the new American president promised to help end the Russia-Ukraine war quickly.

Russian President Vladimir Putin congratulated Mr Trump on taking office hours, saying he was open to dialogue with the new US administration on Ukraine and nuclear arms.

Pressure was reduced based on easing tension in the Middle East after Hamas and Israel exchanged hostages and prisoners on Sunday which marked the first day of a ceasefire after 15 months of war.