Economy
Crude Rises on Unlikely Production Boost, Fresh US-China Tensions
By Adedapo Adesanya
Crude oil futures edged up on Tuesday ahead of a meeting of producers this week that may not lead to a further boost in supply amid concerns a possible global recession could limit energy demand.
The Organisation of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meet on Wednesday with some saying a modest output hike would be discussed.
OPEC’s Joint Technical Committee (JTC) estimated that this year’s global oil market surplus would be 800,000 barrels per day —a downward revision of 200,000 barrels per day from last month’s estimate.
The full OPEC+ group, including Russia, is set to meet to determine the group’s production strategy for September. The group has officially rolled back the full amount of the targets as of August, although the group has so far seriously undershot its production targets by millions of barrels a day.
This helped the price of the Brent futures rise 51 cents or 0.5 per cent to settle at $100.54 a barrel, while the United States West Texas Intermediate (WTI) crude rose 53 cents or 0.6 per cent to settle at $94.42 per barrel.
Also boosting the market were worries that US Speaker of the House Nancy Pelosi’s visit to Taiwan will escalate tensions between the US and China.
China put its military on high alert and said it will launch “targeted military operations” in response to the visit.
The United States, meanwhile, imposed sanctions on Chinese and other firms it said helped to sell tens of millions of Dollars in Iranian oil and petrochemical products to East Asia as it tries to raise pressure on the Middle East countries to curb its nuclear programme.
Analysts have said a nuclear deal with Iran could add about 1 million barrels per day of crude to the world supply.
This is happening as data showed that manufacturers across the United States, Europe and Asia struggled for momentum in July as dwindling global demand and China’s strict COVID-19 restrictions slowed production.
Pressure also came as the American Petroleum Institute (API) reported a surprise build this week for crude oil of 2.165 million barrels, while analysts predicted a draw of 467,000 barrels.
The build comes as the US Department of Energy released 4.6 million barrels from the Strategic Petroleum Reserves (SPR) in the week ending July 29, to 469.9 million barrels.
US crude inventories have shed some 63 million barrels since the start of 2021, with a 40,000 barrel loss since the start of 2020, according to API data.
The market will be waiting for the official data from the Energy Information Agency (EIA) due on Wednesday.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.69 per cent appreciation on Monday, January 13, as investors showed renewed interests in unlisted securities.
During the trading session, the NASD Unlisted Security Index (NSI) increased by 21.07 points to wrap the session at 3,095.00 points compared with the 3,073.93 points recorded in the previous session.
In the same vein, the value of the local alternative stock exchange went up by N7.22 billion to close at N1.061 trillion compared with last Friday’s N1.051 trillion.
Yesterday, FrieslandCampina Wamco Nigeria Plc recorded a growth of N3.78 to close at N42.00 per share versus N38.22 per share, Mixta Real Estate Plc improved by 20 Kobo to end at N2.35 per unit versus the preceding closing rate of N2.15 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to finish at 25 Kobo per share compared with the previous session’s 24 Kobo per share.
Conversely, Geo-Fluids Plc lost 29 Kobo to quote at N4.56 per unit compared with the preceding day’s N4.85 per unit, and Afriland Properties Plc slid by 75 kobo to end the session at N15.50 per share versus the preceding closing rate of N16.25 per share.
During the session, the volume of securities traded decreased by 27.2 per cent to 3.1 million units from 4.3 million units, the value of securities slumped by 81.5 per cent to N3.2 million from N17.2 million, and the number of deals expanded by 57.9 per cent to 30 deals from 19 deals.
At the close of trades, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and IGI Plc with 10.7 million units sold for N2.1 million.
Also, IGI Plc remained the most traded stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira recorded a 0.38 per cent or N5.86 depreciation on the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 13 to close at N1,548.89/$1, in contrast to the preceding session’s N1,543.03/$1.
The local currency weakened further in the official market yesterday as the deadline to cut off Bureaux De Change (BDC) operators from the Electronic Foreign Exchange Matching System (EFEMS) built to enhance transparency in the FX system looms.
Recall that the Central Bank of Nigeria (CBN) in December opened a 42-day window to allow BDCs to buy FX worth $25,000 per week from the spot market.
However, the domestic currency appreciated against the Pound Sterling in the official market on Monday by N11.87 to trade at N1,877.43/£1 compared with last Friday’s N1,889.29/£1 and against the Euro, it improved its value by N4.94 to close at N1,578.87/€1, in contrast to the previous trading day’s N1,583.81/€1.
A look at the parallel market indicated that the Nigerian Naira slumped against the greenback yesterday by N5 to sell at N1,655/$1 compared with the preceding session’s N1,650/$1.
In the cryptocurrency market, large positive outcomes came even as risk assets weighed the possibility of US Federal Reserve rate cuts in the wake of Friday’s hotter-than-expected US jobs report.
The biggest gainer was recorded by Dogecoin (DOGE) as it rose by 3.9 per cent to sell at $0.3422, Bitcoin (BTC) grew by 0.9 per cent to trade at $94,843.98, Binance Coin (BNB) appreciated by 0.8 per cent to sell for $687.84, and Solana (SOL) recorded a 0.8 per cent growth to quote at $185.24.
Further, Ripple (XRP) increased its value by 0.7 per cent to close at $2.53, and Cardano jumped by 0.3 per cent to settle at $0.9469.
On the flip side, Ethereum (ETH) depreciated by 1.9 per cent to finish at $3,159.52, and Litecoin (LTC) went down by 0.9 per cent to close at $98.68, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices rose on Monday as Chinese and Indian buyers sought new suppliers after the administration of President Joe Biden of the United States imposed toughest sanctions yet on Russian energy.
Last Friday, the US Treasury Department imposed sanctions on Gazprom Neft and Surgutneftegas, as well as 183 vessels that traded oil as part of Russia’s so-called “shadow fleet” of tankers. The move is expected to cost Russia billions of Dollars per month.
This pushed the price of Brent higher by $1.25 or 1.6 per cent yesterday to $81.01 per barrel and raised the US West Texas Intermediate (WTI) crude by $2.25 or 2.9 per cent to $78.82 a barrel.
As a result, Chinese and Indian refiners are seeking alternative fuel supplies as they adapt to the severe sanctions on Russian producers and tankers that are designed to curb the revenues of the world’s second-largest oil exporter.
The large sanction gives Ukraine and the US President-elect, Mr Donald Trump, leverage to reach a deal for peace in the almost three years war.
Market analysts note that these sanctions have the potential to take as much as 700,000 barrels per day of supply off the market, which would erase the surplus that we are expecting for this year.
On its part, Goldman Sachs estimated that vessels targeted by the new sanctions transported 1.7 million barrels per day of oil in 2024, or 25 per cent of Russia’s exports. The bank is increasingly expecting its projection for a Brent range of $70-$85 to trade.
The Vladimir Putin-led government said the sanctions risked destabilising global markets, and Russia would seek to counter them.
Many of the tankers named have been used to ship oil to India and China after previous Western sanctions. A price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.
Also, six European Union countries called on the European Commission to lower the price cap put on Russian oil by G7 countries, arguing it would reduce Russia’s revenue to continue the war while not causing a market shock.
However, weaker demand from major oil buyers, China, could have an impact on the tighter supply as data showed that China’s crude oil imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic.
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