Economy
Drop in US Inventories, Improved Demand Spur 2% Rise in Brent
By Adedapo Adesanya
News that oil inventories fell in the largest producing country, the United States, boosted major oil benchmarks by 2 per cent on Wednesday backed by hopes that fuel demand will withstand the coronavirus pandemic.
The international benchmark, Brent crude futures was up by 84 cents or 1.89 per cent at $45.34 per barrel, while the US benchmark, West Texas Intermediate (WTI) crude futures increased by 95 cents or 2.28 per cent to $42.56 per barrel.
Prices had found support when data from the American government through the Energy Information Administration (EIA) on Wednesday showed that crude inventories fell by 4.5 million barrels.
This marked a consecutive week of output drops after it fell to 10.7 million barrels per day from 11 million barrels in the previous week, according to the report.
Another industry group, the American Petroleum Institute (API), reported a weekly decrease of roughly 4 million barrels, according to data released on Wednesday.
The biggest obstacle for the oil market continues to be the uncertainty surrounding the coronavirus and with the global tally for confirmed cases of the coronavirus at more than 20.7 million, there are still some fears about demand worries.
Meanwhile, in a monthly report issued Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) said it now expects global oil demand growth to fall by 9.1 million barrels a day this year to 90.6 million barrels per day, due mainly to lower economic activity levels in developing economies.
The expected decline in demand growth is 100,000 barrels a day lower than last month’s forecast, spelling hope that the market might hold on through the pandemic.
“The forecast assumes that COVID-19 will largely be contained globally, with no further major disruptions to the global economy,” OPEC said in its report.
However, it added that “the global economic growth forecast for 2020 is revised down to -4.0 per cent compared to last month’s forecast of -3.7 per cent, following a further negative impact from the COVID-19 pandemic.”
Demand growth in 2021 is expected to rise by 7 million to 97.6 million barrels per day unchanged from July’s forecast while demand for OPEC crude in 2021 is anticipated to average 29.3 million barrels per day in 2021, around 5.9 million barrels per day higher than the average of 2020.
The COVID-19 pandemic, which began in the first quarter of 2020, has quickly spread around the world, causing a recession in the global economy as well as an unprecedented shock in global oil demand, leading to a large supply glut on the oil market.
Another factor that could boost the market, however, remains undecided. Investors are now showing uncertainty over the indecision in the US over a stimulus package meant to support recovery from the pandemic and this may weigh on prices.
By Adedapo Adesanya
The Minister of Finance, Mr Wale Edun, says Nigeria has no immediate plans to approach the International Monetary Fund (IMF) for financial assistance.
Mr Edun made this known at the African Finance Ministers’ briefing during the IMF and World Bank Annual Meetings on Thursday in Washington, D.C. United States.
He said reliance on ongoing domestic economic reforms was yielding positive results.
According to him, Nigeria’s reforms over the past two years have restored policy credibility and strengthened resilience against global economic shocks affecting many African economies, adding that the country has prioritised market-based adjustments, avoiding administrative controls, particularly in foreign exchange and petroleum pricing mechanisms.
Mr Edun reaffirmed that Nigeria would continue to rely on internal policy measures rather than seeking multilateral lending support at this time.
However, he urged faster and more coordinated financial assistance for African countries amid discussions on a proposed $50 billion global support package.
The Minister said Nigeria had built buffers through reforms, but noted that several African nations remained highly exposed and required urgent external financial support.
He said Nigeria’s reliance on market mechanisms had enabled smoother economic adjustments, reduced disruptions, and sustained the country’s macroeconomic trajectory amid global uncertainties.
However, on Monday, the |Minister said Nigeria would seek stronger international financial support at this week’s IMF-World Bank Spring Meetings as the Iran war lifts fuel costs at home and complicates reforms.
He said ahead of the meeting that surging crude prices had some clear benefits for the country, which is Africa’s top oil producer, boosting foreign exchange earnings.
“But the shock comes at a critical transition point, intensifying inflationary pressures and raising living costs for households,” he added.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange fell by 0.29 per cent on Thursday, April 16, after two securities plunged at the close of business, offsetting the gains recorded by three securities.
According to data, the NASD Unlisted Security Index (NSI) went down by 11.11 points to close at 3,862.98 points compared with the previous day’s 3,874.09 points, and the market capitalisation shrank by N6.64 billion to close at N2.311 trillion compared with the previous day’s N2.317 trillion.
Yesterday, FrieslandCampina Wamco Nigeria Plc declined by N1.36 to trade at N97.64 per share versus Wednesday’s closing price of N99.00 per share, and Central Securities Clearing System (CSCS) Plc slipped by N1.16 to sell at N58.00 per unit compared with the preceding day’s N59.16 per unit.
However, NASD Plc appreciated by N1.14 to N38.50 per share from N37.36 per share, UBN Property Plc improved its share price by 20 Kobo to close at N2.18 per unit versus N1.98 per unit, and Lighthouse Financials Plc added 6 Kobo to sell at 72 Kobo per share, in contrast to the 66 Kobo per share it was traded at midweek.
Trading data showed that the value of securities surged by 124.9 per cent to N64.9 million from N28.9 million, the volume of securities increased by 18.4 per cent to 597,775 units from 505,075 units, and the number of deals rose by 2.5 per cent to 41 deals from 40 deals.
At the close of business, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by CSCS Plc with 58.8 million units exchanged for N3.9 billion, and Okitipupa Plc with 27.8 million units traded for N1.9 billion.
GNI Plc was also the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units sold for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.
By Adedapo Adesanya
The value of the Naira improved against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) by N1.44 or 0.11 per cent on Thursday, April 16, to N1,342.30/$1 from Wednesday’s N1,343.74/$1.
In the same vein, the domestic currency appreciated against the Pound Sterling in the official market during the session by N3.56 to close at N1,819.36/£1 compared with the previous rate of N1,822.92/£1, and against the Euro, it gained N3.99 to trade at N1,581.09/€1, in contrast to the N1,585.08/€1 it was traded at midweek.
At the black market segment, the Naira appreciated against the greenback yesterday by N5 to sell at N1,375/$1 versus the preceding session’s N1,380/$1, and at the GTBank FX desk, it improved by N16 to settle at N1,355/$1 compared with the previous day’s N1,371/$1.
The Central Bank of Nigeria (CBN) data revealed that NFEM interbank turnover decreased to N72.255 million across 82 deals on Thursday, from N114.347 million.
The relative appreciation of the official spot rate suggests there is no significant demand for foreign payments. Meanwhile, external reserves remain at $48.70 billion, down from the 2009 peak of $50 billion amidst uncertainties in the global commodities market.
The global market is looking at forthcoming peace talks between the US and Iran with hopes that it would resolve disruptions to Middle Eastern energy supplies caused by the ongoing war.
As for the cryptocurrency market, it recorded a mixed outcome, as traders weighed possible scenarios ahead of next week’s US-Iran cease-fire deadline.
The market is heavily short, raising the risk of a sharp short squeeze that some traders say could push prices toward $125,000 in the coming months.
Solana (SOL) appreciated by 2.4 per cent to $87.41, Ripple (XRP) jumped 1.5 per cent to $1.42, Cardano (ADA) rose 0.9 per cent to $0.2525, Binance Coin (BNB) increased by 0.5 per cent to $628.32, Dogecoin (DOGE) gained 0.3 per cent to finish at $0.0969, and TRON (TRX) expanded by 0.1 per cent to $0.3257.
On the flip side, Ethereum (ETH) depreciated by 1.6 per cent to $2,320.35, and Bitcoin (BTC) went down by 0.5 per cent to $74,677.83, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
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