Economy
Crude Oil Won’t Sell at $90 Per Barrel in 2023—Analysts
By Adedapo Adesanya
Some oil market analysts have projected that the price of crude oil is not expected to reach $90 per barrel this year due to factors such as a lower possibility of deeper supply cuts by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) and China’s record-high crude oil stocks.
Brent crude, which serves as Nigeria’s crude benchmark oil, has experienced more than a 5 per cent increase in the past month. This has been attributed to additional output reductions by OPEC+ members and concerns about aggressive interest rate hikes by central banks being eased by cooling inflation in major economies.
Analysts at Goldman Sachs, a leading global investment bank, believe that the market will shift into a deficit in the second half of the year, and as a result, prices could potentially move towards $86 a barrel.
The bank asserts that a significantly larger deficit of 3.3 million barrels per day would be necessary to drive crude prices back to the three-figure range. As such, Goldman Sachs believes it is unlikely that the 23-member alliance will cut production in order to raise prices to such levels.
The Energy Minister of the United Arab Emirates (UAE), Mr Suhail Al Mazrouei, said recently that current actions by OPEC+ were sufficient to support the oil market for now, and the group is “only a phone call away” if any further steps are needed.
OPEC+, which includes allies led by Russia, pumps around 40 per cent of the world’s crude. The group has been limiting supply since late 2022 to bolster the market.
On its part, JPMorgan recently cut its oil price forecasts for this year and 2024 as it sees the global supply growth offsetting a record rise in demand while inventory build-up lowers the risk of price spikes. The Wall Street bank revised its average Brent price forecast for 2023 to $81 per barrel from $90 earlier, and for West Texas Intermediate (WTI) to $76 a barrel from $84 previously.
JPMorgan oil market experts also lowered its 2024 price forecasts for Brent to $83 per barrel from $98 and for WTI to $79 a barrel from $94 earlier. Brent futures were trading around $75 a barrel on June 14, while US WTI crude was around $70 per barrel.
The US bank now sees global oil supply growing by 2.2 million barrels per day in 2023, surpassing projected demand growth of 1.6 million barrels per day.
“It is becoming increasingly clear that high oil prices over the past two years did exactly what they are supposed to do — incentivize supply,” JPMorgan said in a note. The world could consume a record-setting 101.4 million barrels per day of oil this year, led by unprecedented demand in China, India, and the Middle East, it added.
Goldman Sachs report also highlights the potential impact of US shale companies ramping up their output. As these companies have experienced a decrease in production costs, any potential cuts made by the alliance of 23 oil-producing countries could be undermined.
In early June, Saudi Arabia, the world’s largest crude exporter, announced that it would extend its voluntary output cut of one million barrels per day until August. Russia also plans to reduce its oil supplies by 500,000 barrels per day in August, in addition to the previously announced output reductions.
The OPEC+ group has implemented total production curbs of 3.66 million barrels per day, which accounts for approximately 3.7 per cent of global demand. These include a two million barrel per day reduction agreed upon last year and voluntary cuts of 1.66 million barrels per day announced in April.
Goldman Sachs points out that there is an increased awareness of the effects of high oil prices, with the energy crisis experienced last year leading to radical policies aimed at achieving net-zero emissions.
In March 2022, Brent crude reached nearly $140 a barrel due to fears of global energy shortages triggered by Russia’s invasion of Ukraine.
China, the world’s second-largest economy and top crude importer, is expected to play a significant role in crude oil demand this year. While China’s economy rebounded after the lifting of COVID-19 restrictions earlier this year, it experienced a slowdown in May, with weaker retail sales, manufacturing output, and a slowdown in the property sector.
Although China’s macroeconomic performance could improve, Goldman Sachs highlights that the country’s crude oil inventories are nearing record highs. As a result, if demand outperforms expectations, these inventories are likely to be drawn down substantially.
Analysts also said China’s pledge to boost its economy has improved sentiment in oil markets while fundamentals look increasingly bullish.
While the economic data from China and the US remain mixed, the fundamentals are increasingly pointing to a tighter oil market this summer.
Russian crude oil exports have shown signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16. Russia is preparing to cut 500,000 barrels per day off its oil exports in August, and shipping plans so far suggest that Russia could deliver on at least part of its pledge to reduce oil exports next month.
Saudi Arabia’s crude oil exports have also started to decline, to below 7.0 million barrels per day in May, for the first time in many months.
Crude shipments out of the world’s top exporter could further decline as Saudi Arabia is now cutting its production by 1.0 million barrels per day in July and August.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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