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 Dipo Olowookere
Renewed buying interest raised the Nigerian Exchange (NGX) Limited by 0.33 per cent on Monday, with gains recorded in almost all the major sectors of the bourse at the close of transactions.
According to data harvested by Business Post, the insurance counter expanded by 0.62 per cent, the banking index grew by 0.59 per cent, the energy sector appreciated by 0.40 per cent, and the consumer goods space improved by 0.10 per cent, while the industrial goods segment closed flat.
When the closing gong was struck by 4 pm to signify the close of business on Customs Street, the All-Share Index (ASI) was up by 1,113.76 points to 243,707.07 points from 242,593.31 points, and the market capitalisation chalked up N714 billion to close at N156.308 trillion compared with the previous session’s N155.594 trillion.
Interest in Nigerian stocks yesterday resulted in a rise in the activity level, with the trading volume soaring by 17.86 per cent to 717.2 million units from 608.5 million units. The trading value advanced by 77.19 per cent to N56.7 billion from N32.0 billion, and the number of deals surged by 36.22 per cent to 73,321 deals from 53,826 deals.
FCMB was the busiest stock during the trading day, with a turnover of 152.3 million units worth N1.8 billion, Premier Paints exchanged 61.0 million units valued at N135.3 million, Dangote Cement traded 34.7 million units for N29.7 billion, The Initiates sold 32.8 million units worth N1.0 billion, and Jaiz Bank transacted 32.6 million units valued at N293.3 million.
Yesterday, the market breadth index was positive after the exchange closed with 37 price gainers and 28 price losers, representing strong investor sentiment.
International Energy Insurance gained 9.92 per cent to settle at N7.98, the Initiates added 9.91 per cent to its share price to quote at N32.15, ABC Transport garnered 9.68 per cent to trade at N6.80, Abbey Mortgage Bank grew by 9.63 per cent to close at N10.25, and Linkage Assurance soared by 9.36 per cent to N1.87.
On the flip side, Fidson Healthcare gave up 10.00 per cent to finish at N122.85, Academy Press crashed by 9.70 per cent to N7.45, RT Briscoe depreciated by 9.43 per cent to N13.45, SUNU Assurances tumbled by 9.37 per cent to N4.06, and Learn Africa decreased by 8.70 per cent to N10.50.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a marginal 0.05 per cent drop on Monday, June 8, depleting the market capitalisation by N1.27 billion to N2.606 trillion from N2.607 trillion, and cutting the Unlisted Security Index (NSI) by 2.12 points to 4,356.20 points from the previous 4,358.32 points.
The contraction witnessed during the session was triggered by a price loser, which overpowered that gains recorded by two securities on the trading platform.
Data indicated that MRS Oil Plc lost N6 at the close of business to settle at N165.00 per share compared with last Friday’s price of N171.00 per share.
Conversely, Lighthouse Financial Services Plc added 9 Kobo to sell at N1.03 per unit versus 94 Kobo per unit, and Central Securities Clearing System (CSCS) Plc appreciated by 8 Kobo to N78.48 per share from N78.40 per share.
The volume of securities traded by investors yesterday soared by 51.9 per cent to 213,188 units from 140,345 units, and the value of securities increased by 12.6 per cent to N20.2 million from N17.9 million, while the number of deals executed fell by 7.4 per cent to 25 deals from 27 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 64.8 million units exchanged for N4.4 billion.
GNI Plc also remained as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
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