Economy

Crude Oil Defies Demand Pressures, Gains 0.93%

Published

4 years ago

16/12/2020

By Adedapo Adesanya

Crude oil prices maintained positive momentum on Tuesday as the boost from the distribution of vaccines outweighed the demand pressures caused by new lockdowns across Europe.

More countries in Europe and some states in the US are tightening the coronavirus restrictions over Christmas and the new year, which is likely to weigh on demand.

This is happening despite widespread vaccinations in Western Europe and North America. The vaccine development has, however, led to a surge in optimism for the market.

As at last night, the price of the Brent was up by 47 cents or 0.93 per cent to trade at $50.76 per barrel while the West Texas Intermediate (WTI) crude futures moved up by 10 cents or 0.20 per cent to trade at $47.53 per barrel.

The bullish run of oil prices continues to defy the negative trends surrounding the market and the global economy at large.

In its latest forecast on Tuesday, the International Energy Association (IEA) cut its 2021 global oil demand growth projection resulting from travel restrictions and border closures, which it expects to remain in place until COVID-19 vaccines are widely available.

The Paris-based agency noted in its Oil Market Report (OMR) that global oil consumption is expected to increase by 5.69 million barrels per day next year, which is 110,000 barrels per day lower than the growth predicted a month ago.

It now sees 2020 demand falling by 8.82 million barrels per day, which is a 40,000-barrel per day lower than forecast in the previous report.

In addition, the IEA sees potential for global production to edge higher this month, even before the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) increases its collective quota by 500,000 barrels per day in January.

Global supply rose by 1.5 million barrels per day in November to 92.7 million barrels per day as the US recovered from hurricane-related shut-ins and Libya’s production increased.

This lends backing to the OPEC report, which was released a day ahead, that showed the group’s oil production had risen for November while adjusting downward its forecast for oil demand.

In the US, the American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 1.9 million barrels for the week ending December 11. Analysts had predicted an inventory draw of 1.937 million barrels for the week.

On Wednesday, the Energy Information Administration (EIA) will release a more trusted, accurate data which could sway the market into the bearish territory.

Economy

NNPC Ready for Initial Public Offer, Shops for Investment Bank Partners, Others

Published

11 minutes ago

27/03/2025

Dipo Olowookere

By Dipo Olowookere

The much-awaited listing of shares of the Nigerian National Petroleum Company (NNPC) Limited may happen soon as the state-owned oil agency has expressed its readiness to join the nation’s capital market.

At a consultative meeting with partners at the NNPC Towers, Abuja, on Thursday, the Chief Finance and Investor Relations Officer (CFIO) of the NNPC, Mr Olugbenga Oluwaniy, said the process of listing on the Nigerian Exchange (NGX) Limited is at the final stage.

The NNPC is required to make its stocks available to members of the public based on the provisions of the Petroleum Industry Act (PIA) 2021.

The PIA provides for the NNPC Ltd to list its shares in the capital market in line with the provisions of the Company and Allied Matters Act (CAMA) 1990.

This exercise should have happened, but it has been delayed, but with the latest information, the wait may soon be over.

Mr Oluwaniyi, via a statement today by the company’s Chief Corporate Communications Officer, Mr Olufemi Soneye, disclosed that NNPC was currently engaging with prospective partners in an exercise tagged NNPC Ltd. IPO Beauty Parade in line with capital market regulations before the commencement of the Initial Public Offer (IPO).

According to the CFIO, the aim of the IPO Beauty Parade is to access potential partners and determine in what ways they could be of support to the company.

He listed the areas of partnership required to include Investor Relations, IPO Readiness Advisers, and Investment Bank Partners, noting that the organisation with the best offer in terms of project partnership would be selected for each of the three categories.

Economy

Petrol Price to Rise as Landing Cost Hits N885 Per Litre

Published

6 hours ago

27/03/2025

Adedapo Adesanya

By Adedapo Adesanya

The pump price of petrol will likely increase in coming weeks as the landing cost of a litre of imported Premium Motor Spirit (PMS) into the country increased by N88 from N797 per litre last week to N885 per litre this week.

This informing is according to the latest data from the Major Energies Marketers Association of Nigeria (MOMAN) on Wednesday.

The association confirmed the rise in the landing cost in its daily energy bulletin released on Wednesday, arguing that price changes are inevitable in a deregulated market.

The new landing cost is N25 higher than the N860 per litre that end-user customers pay for Dangote petrol from MRS and other partners.

Similarly, the Dangote refinery’s ex-depot petrol price is N815 per litre, N70 lower than the new landing cost..

The landing cost fell from about N927 below Dangote’s ex-depot price, forcing the refinery to react with a price cut.

The development resulted in the loss of billions of Naira by marketers as they were made to sell petrol below their costs.

There are, however, indications that this may lead to increase in petrol prices in the coming weeks as a result of the disagreement between the Dangote refinery and the Nigerian National Petroleum Company (NNPC) Limited over the Naira-for-crude deal and the rise in the landing cost.

While announcing the suspension of the sale of the product in local currency last week, the Dangote Group said, “Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.

“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.”

Immediately after the announcement, the cost of loading petrol at private depots in Lagos jumped to about N900/litre.

In a related development, seven vessels carrying imported PMS were expected to berth at seaports along the nation’s borders between March 17 and 23.

These vessels, carrying 115,000 metric tonnes, representing 154.22 million litres of PMS, brought in products through three seaports – Tincan port in Lagos, the Lekki Deep Seaport in Lagos, and the Calabar port – to improve fuel supply nationwide.

Economy

Mastering Futures and Options: A Guide to Starting Your Trading Journey

Published

7 hours ago

27/03/2025

Dipo Olowookere

Introduction

Trading in futures and options (F&O) has become a popular way to diversify investments and hedge risks in the financial markets. With the right knowledge and strategy, anyone can start trading and leverage F&O to maximize returns. This guide will walk you through the fundamentals of business with futures and options, how to start trading, and essential strategies for success.

Understanding Futures and Options

What Are Futures?

A futures contract is a financial agreement to buy or sell an asset (stocks, commodities, or indices) at a predetermined price on a future date and to start future and option trading futures and options. Futures are standardized contracts traded on exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).

Key Features of Futures Contracts:

Obligatory Execution: Buyers and sellers must fulfill the contract on the expiry date.
Margin Trading: Traders only pay a fraction of the total contract value as a margin.
Leverage: Investors can take large positions with limited capital.

What Are Options?

Options give traders the right (but not the obligation) to buy or sell an asset at a specific price before or on the contract expiry date.

Types of Options:

Call Options – Gives the right to buy an asset at a fixed price.
Put Options – Gives the right to sell an asset at a fixed price.

Why Trade Futures and Options?

Hedging Against Market Risks: Investors use F&O to hedge risks in volatile markets.
High Leverage: Traders can control large positions with minimal capital.
Profit in Bull and Bear Markets: Options trading allows earning from both rising and falling markets.
Portfolio Diversification: F&O trading provides exposure to various asset classes.

How to Start Trading in Futures and Options

1. Open a Trading and Demat Account

To trade in F&O and how to start trading you need a Demat and trading account with a registered stockbroker.

Steps to Open an Account:

Choose a SEBI-registered stockbroker (e.g., Zerodha, Upstox, Angel Broking).
Submit KYC documents (PAN, Aadhaar, bank details, income proof).
Complete account verification and receive login credentials.

2. Understand Market Fundamentals

Before trading, gain knowledge about:

Stock Market Trends: Track NIFTY, SENSEX, and India VIX to understand volatility.
Fundamental and Technical Analysis: Learn to analyze financial reports and price charts.
Option Greeks (Delta, Gamma, Theta, Vega): These help in assessing option price movements.

3. Learn About Margin Requirements

Trading in F&O requires margin money, which varies based on contract size and market conditions. Stockbrokers provide margin calculators to help traders plan their positions.

4. Choose the Right Trading Strategy

Popular Futures Trading Strategies:

Trend Following Strategy – Buy futures in an uptrend, sell in a downtrend.
Spread Trading – Buy and sell futures contracts simultaneously to minimize risk.
Scalping – Profit from small price movements by making multiple trades.

Popular Options Trading Strategies:

Covered Call Strategy – Holding a stock while selling call options to earn premiums.
Straddle Strategy – Buying both a call and put option to profit from high volatility.
Iron Condor Strategy – Combining multiple options contracts to limit risk and enhance returns.

5. Start Trading with a Demo Account

Most stockbrokers provide paper trading accounts where beginners can practice trading without real money. This helps in understanding price movements, placing orders, and managing risk.

6. Monitor and Manage Risks

Stop-Loss Orders: Protect against significant losses by setting stop-loss levels.
Position Sizing: Avoid investing all capital in a single trade.
News & Events: Track financial news, RBI policies, and corporate earnings reports.

Essential Tips for Successful F&O Trading

Start Small: Begin with a few contracts and increase exposure gradually.
Stay Updated: Follow market news, economic indicators, and stock trends.
Avoid Overtrading: Excessive trading can lead to high brokerage fees and losses.
Maintain a Trading Journal: Keep records of trades to analyze mistakes and improve strategies.
Use Hedging Techniques: Reduce risk by using protective puts and call options.

Conclusion

Trading in futures and options is a powerful way to maximize investment opportunities and manage risks. By understanding market trends, choosing the right strategies, and practicing risk management, traders can build a profitable trading career. If you’re new to F&O trading, start with a Demat account, practice with demo trades, and gradually scale up as you gain confidence.

With the right approach, trading in futures and options can be a lucrative business venture and a strong financial tool for long-term success.