Economy
Crude Oil Prices Drop on Weak German, Chinese Data
By Adedapo Adesanya
Crude oil prices eased on Tuesday following the release of negative economic news from Germany and China ahead of the US Federal Reserve decision on interest rates.
Brent futures fell by 72 cents or 1.0 per cent to settle at $73.19 a barrel while the US West Texas Intermediate (WTI) crude slipped by 63 cents or 0.9 per cent to $70.08 per barrel.
In China, the world’s second-biggest economy, industrial output growth quickened slightly in November, while retail sales disappointed.
This has spurred calls for the Chinese government to ramp up consumer-focused stimulus as policymakers brace for more US trade tariffs once President-elect Donald Trump takes office for a second time in January.
China is the world’s largest oil importer and market analysts note that the economic situation may dampen oil demand.
Also in Germany, Europe’s largest economy, business morale worsened more than expected in December, a survey showed on Tuesday.
The Ifo Institute said its business climate index decreased to 84.7 in December from a slightly downwardly revised 85.6 the previous month.
This development was weighed down by companies’ pessimistic assessment of the coming months amid geopolitical uncertainty and an industrial slump.
Meanwhile, a separate survey released by the ZEW Institute showed investors were much more optimistic, largely pinning their hopes on a change in government following the upcoming February 23 election.
Market analysts noted that 2024 will mark the second straight year that Germany will stagnate economically.
In the world’s biggest economy, US retail sales increased more than expected in November amid an acceleration in motor vehicle and online purchases.
The report from the US Commerce Department did not impact expectations that the US Federal Reserve would cut interest rates on Wednesday for the third time since the central bank initiated its policy easing cycle.
After hiking rates aggressively in 2022 and 2023 to tame a surge in inflation, the US Federal Reserve started to lower rates in September.
Lower rates decrease borrowing costs, which can boost economic growth and oil demand.
The US central bank meeting will conclude on Wednesday and the market will confirm if it goes with the 25 basis points cut expectation.
Crude oil inventories in the US fell by 4.7 million barrels for the week ending December 6, according to the American Petroleum Institute (API). For the week prior, the API reported a 499,000-barrel build in crude inventories.
So far this year, crude oil inventories have fallen by roughly 8 million barrels since the beginning of the year, according to API data.
Official data from the Energy Information Administration (EIA) will be released later on Wednesday.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.29 per cent appreciation on Tuesday, December 17 lifted by FrieslandCampina Wamco Nigeria Plc.
After closing in the past three sessions in the red territory, the share price of FrieslandCampina Wamco Nigeria Plc improved by N3.90 on Tuesday to settle at N44.00 per unit, in contrast to Monday’s closing price of N40.10 per unit.
As a result, the Unlisted Security Index (NSI) added 8.85 points to wrap the session at 3,023.80 points compared with 3,014.95 points recorded in the previous session.
In the same vein, the value of the trading went up yesterday by N3.03 billion to settle at N1.036 trillion compared with the N1.330 trillion it closed in the preceding session.
Business Post reports that during the trading session, three securities depreciated as Nipco Plc shrank by N14.70 to close at N132.30 per share versus the preceding closing rate of N147 per share.
Further, Geo-Fluids Plc weakened by 36 Kobo to finish the trading session at N3.55 per unit compared with Monday’s closing price of N3.91 per unit, and Afriland Properties Plc lost 21 Kobo to end the session at N15.99 per share, in contrast to the preceding day’s N16.20 per share.
On Tuesday, the volume of securities traded in the session went up by 496.4 per cent to 540,503 units from the 90,629 units recorded a day earlier, as the value of shares increased by 1,190.2 per cent to N29.4 million from the N2.3 million recorded on Monday, while the number of deals decreased by 16.7 per cent to 15 deals from the 18 deals recorded in the previous trading day.
When the market closed for the day, Geo-Fluids Plc was the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, trailed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
The most active stock by value (year-to-date) for the session remained Aradel Holdings Plc with 108.7 million units sold for N89.2 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc with 297.3 million units valued at N5.3 billion.
By Adedapo Adesanya
The federal government may approve the $1.3 billion asset sale deal between Shell and Renaissance, which was rejected in the coming weeks.
The Africa Report reported that deal may get approval following the announcement of Shell’s $5 billion investment in the Bonga North project.
According to the publication, the final investment decision (FID) served as a pavement for the oil major to get approval for the sale of its onshore and shallow water assets to Renaissance.
In October, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr Gbenga Komolafe, revealed that while the government had processed five divestment applications, only four were approved – leaving out Shell’s asset sale to Renaissance, a consortium made up of four indigenous companies including Aradel Holdings, ND Western, First Exploration and Production (E&P) and WalterSmith as well as the international energy group, Petrolin.
These assets, initially at $2.4 billion and now at $1.3 billion, include an estimated 6.73 billion barrels of crude oil and condensate, along with 56.27 trillion cubic feet of gas.
The FG rejected the transaction because the consortium did not have the financial, experiential, and technical capacities to take over the assets.
On Monday, Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell Plc announced the FID on Bonga North, a deep-water project off the coast of Nigeria.
President Bola Tinubu welcomed the move, lauding it as a good investment into the nation’s oil and gas sector.
Bonga North will be a subsea tie-back to the Shell-operated Bonga Floating Production Storage and Offloading (FPSO) facility which Shell operates with a 55 per cent interest.
The Bonga North project will involve drilling, completing, and starting up 16 wells (eight production and eight water injection wells), modifications to the existing Bonga Main FPSO and the installation of new subsea hardware tied back to the FPSO.
Bonga North currently has an estimated recoverable resource volume of more than 300 million barrels of oil equivalent (boe) and will reach a peak production of 110,000 barrels of oil a day, with the first oil anticipated by the end of the decade.
Bonga North will help ensure Shell’s leading Integrated Gas and Upstream business continues to drive cash generation into the next decade.
By Adedapo Adesanya
The value of the Naira improved in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, December 17 after it appreciated against the US Dollar by N1.05 or 0.07 per cent to settle at N1,544.05/$1 compared with the preceding day’s N1,545.10/$1.
However, the local currency depreciated against the Pound Sterling in the official market during the session by N5.75 to sell for N1,946.63/£1 compared with the previous day’s rate of N1,940.88/£1 and against the Euro, it slumped by N2.86 to finish at N1,611.73/€1, in contrast to Monday’s closing price of N1,608.87/€1.
In the parallel market, the Nigerian currency maintained stability against the US Dollar on Tuesday at N1,660/$1, according to data obtained by Business Post.
A look at the cryptocurrency market showed that profit-taking dominated yesterday as investors look forward to the decision by the US Federal Reserve to cut interest rates, a move that could impact riskier assets like crypto.
Ethereum (ETH) slid by 4.2 per cent to $3,842.17, Dogecoin (DOGE) depreciated by 3.7 per cent to sell at $0.3849, Cardano (ADA) fell by 3.5 per cent to trade at $1.03, Bitcoin (BTC) slumped by 2.6 per cent to quote at $103,838.00, Binance Coin (BNB) went down by 0.9 per cent to $710.31, and Ripple (XRP) dropped 0.3 per cent to finish at $2.51.
On the flip side, Litecoin (LTC) appreciated by 4.8 per cent to close at $122.42, and Solana (SOL) jumped by 0.6 per cent to trade at $216.11, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat $1.00 apiece.
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