Economy
Negative Economic Data Keeps Lid on Brent, WTI Prices Friday
By Adedapo Adesanya
Crude oil prices retreated at the end of the week on the back of more negative news from economic data worsened by the coronavirus pandemic.
on Friday, the Brent crude futures fell 70 cents or 1.56 per cent to trade at $44.20 per barrel, while the US West Texas Intermediate (WTI) crude futures dropped 48 cents or 1.12 per cent to $42.34 per barrel.
Eurozone purchasing managers index readings yesterday showed a slowdown in the region’s economic activity, while data out of Japan indicated a continued decline in activities.
The IHS Markit flash eurozone composite purchasing managers index slipped to a two-month low of 51.6 in August from 54.9 in July. The number, while pointing to improving conditions as it’s above 50, nonetheless, came in below economist expectations for a 55.3 reading.
Meanwhile, a renewed rise in COVID-19 cases in parts of Europe and elsewhere have underlined worries about the outlook for oil demand.
In the United States, the number of Americans who filed for unemployment benefit last week increased and topped one million after recording the lowest figure the previous week since the coronavirus pandemic began, according to the US Labor Department.
A total of 1,106,000, jobless claims were filed, representing a week-on-week increase of 135,000 and this was not supportive of the market.
In Asia, a cutback in refining activity in response to poor fuel demand is a troubling sign, analysts said.
Oil prices have collapsed as the coronavirus curtailed travel and economic activity. While some countries have resumed activities allowing demand to make recovery. However, the unfavourable outlook has kept a lid on prices and experts expect this to persist.
The problem of oversupply is also affecting the market. Reports noted that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) offset could total 2.3 million barrels per day.
The group of OPEC+ producers that may need to compensate for past overproduction could cut by as much as 2.31 million barrels per day, according to calculations and if spread over more than one month, the figure would be smaller.
To further add to concerns over diminishing demand, US crude oil stocks fell less than market forecasts for the week ending August 14.
According to data released by the country’s Energy Information Administration (EIA), US commercial crude oil inventories fell by 1.6 million barrels to 512.5 million barrels for the week ending August 14, relative to the market expectation of a decrease of 2.7 million barrels.
By Adedapo Adesanya
For the second consecutive session, FrieslandCampina Wamco Nigeria Plc plunged the NASD Over-the-Counter (OTC) Securities Exchange by 0.04 per cent on Thursday, March 13.
The milk producer was the only price loser during the session, weakening the gains reported by three other securities.
At the close of transactions, the price of FrieslandCampina Wamco Nigeria Plc went down by N1.88 to settle at N35.57 per share from Wednesday’s closing price of N37.45 per share.
However, Okitipupa Plc gained N3.00 to end at N330.00 per unit compared with the N327.00 per unit it traded at midweek, Geo-Fluids Plc improved its value by 20 Kobo to N3.15 per share from N2.95 per share and UBN Property Plc grew by 10 Kobo to N1.95 per unit from its previous rate of N1.85 per unit.
Yesterday, the market capitalisation of the bourse went down by N770 million to settle at N1.954 trillion compared with the preceding day’s N1.955 trillion and the NASD Unlisted Security Index (NSI) dropped 1.32 points to close at 3,384.18 points, in contrast to the previous trading day’s 3,385.50 points.
The volume of securities traded at the bourse at midweek increased by 1,204.5 per cent to 3.9 million units from the 298,845 units achieved on Wednesday, the value of securities traded by investors went up by 126.9 per cent to N23.6 million from the N10.4 million quoted at the preceding session, and the number number of deals decreased by 32.00 per cent to 17 deals from 25 deals.
Impresit Bakolori Plc was the most active stock by value (year-to-date) with 533.9 million units worth N520.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 12.7 million units valued at N493.2 million, and Afriland Properties Plc with 17.2 million units sold for N352.8 million.
Also, Impresit Bakolori Plc was the most active stock by volume (year-to-date) with 533.9 million units worth N520.9 million, trailed by Industrial and General Insurance (IGI) Plc with 69.9 million units worth N23.7 million and Afriland Properties Plc with 17.2 million units valued at N352.8 million.
By Adedapo Adesanya
The Naira closed flat against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, March 13 at N1,540.68/$1, though FX pressure remained.
It was the first time in the last few sessions that the value of the local currency did not depreciate in the official market against the greenback.
However, the domestic currency weakened against the British Pound Sterling at the spot market yesterday by N4.19 to close at N1,990.13/£1 versus the previous day’s N1,985.94/£1.
It was also a similar situation for the Euro at NAFEM, where the Nigerian currency lost N60 Kobo to quote at N1,676.08/€1, in contrast to the preceding session’s value of N1,675.48/€1.
In the same vein, the Nigerian Naira crumbled against the US Dollar in the black market during the trading day by N5 to sell for N1,590/$1 versus Wednesday’s closing price of N1,590/$1.
Recent interventions have failed to ease pressure on the market with the country’s foreign reserves losing over $2 billion in the last month and projected to lose more as the Central Bank of Nigeria (CBN) sustains US Dollar sales to banks and debt servicing payments.
Meanwhile, in the cryptocurrency market, tokens rose despite persisting US trade war fears which are dampening risk-asset trader appetites.
Market analysts noted that concerns about a President Donald Trump triggered tariff war and a slowing economy in the US, the world’s largest economy, is not offering a clear direction.
The February print of the US Producer Price Index (PPI) came in below median expectations, copying the Consumer Price Index (CPI) results from the day prior.
On an unadjusted basis, the index for final demand advanced 3.2 percent for the 12 months ended in February, the US Bureau of Labor Statistics (BLS) stated.
Ripple (XRP) gained 3.3 per cent to finish at $2.30, Ethereum (ETH) added 1.5 per cent to sell at $1,891.13, Solana (SOL) jumped by 0.9 per cent to $124.71, Binance Coin (BNB) also appreciated by 0.9 per cent to $580.79, and Dogecoin (DOGE) rose by 0.8 per cent to $0.1685.
On the flip side, Bitcoin (BTC) crashed by 1.2 per cent to $82,033.71, Cardano (ADA) declined by 0.7 per cent to $0.7154, and Litecoin (LTC) depreciated by 0.3 per cent to $88.95, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices fell by over 1 per cent on Thursday as markets weighed macroeconomic concerns from the United States as well as other countries, with Brent futures losing $1.07 or 1.5 per cent to trade at $69.88 a barrel and the US West Texas Intermediate (WTI) crude futures declining by $1.13 or 1.7 per cent to $66.55 a barrel.
The market was depressed from risk that tariff wars between the US and other countries could hurt global demand.
On Thursday, US President Donald Trump threatened to slap a 200 per cent tariff on wine, cognac and other alcohol imports from Europe, in addition to previous tariffs.
According to market analysts, this has opened a new front in a global trade war and has sent jitters to investors who are worried about stiffer trade barriers around the world’s largest consumer market.
This latest move is in response to the European Union’s plan to impose tariffs on American whiskey and other products next month, which itself is a reaction to Mr Trump’s 25 per cent tariffs on steel and aluminum imports that took effect on Wednesday.
The American president has threatened to impose an array of trade penalties since returning to the White House in January, though he has postponed action on many of them.
Also, uncertainty stemming from a US proposal for a Russia-Ukraine ceasefire also affected the market after Russian President Vladimir Putin said it agreed to stop fighting but any ceasefire should lead to a lasting peace and address root causes of the conflict.
The possibility of this could boost the availability of Russian oil.
Also on the supply front, the International Energy Agency reported that global oil supply could exceed demand by around 600,000 barrels per day this year, with global demand now expected to rise by just 1.03 million barrels per day, off last month’s forecast by 70,000 barrels per day.
The report cited deteriorating macroeconomic conditions, including escalating trade tensions.
Meanwhile, the Organisation of the Petroleum Exporting Countries said in its monthly report that the wider OPEC+ group which includes OPEC plus Russia and other allies, in February raised output by 363,000 barrels per day to 41.01 million barrels per day, led by Kazakhstan.
This comes as OPEC+ plans to phases out its most recent layer of output cuts beginning in April.
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