Economy
Oil Continues Fall as US Crude Inventories Rise
By Adedapo Adesanya
Oil prices edged lower on Wednesday after crude inventories in the United States rose by more than anticipated, according to data from the Energy Information Administration (EIA).
This dragged the Brent crude downward by 0.54 per cent or 43 cents to $78.66 per barrel and battered the US West Texas Intermediate (WTI) by 0.54 per cent or 41 cents to $74.88 per barrel.
According to the EIA, US crude stockpiles rose by 4.6 million barrels last week, exceeding expectations, boosted by a rebound in output as offshore facilities shut in by two Gulf hurricanes resumed activity.
The American Petroleum Institute (API) had earlier reported an unexpected inventory build of 4.13 million barrels, which took some depressed the oil price rally that pushed Brent crude over $80 a barrel—a three-year high— on Tuesday.
The rally was sparked by a gas and coal crisis that caused worry about energy supplies during the northern hemisphere winter when demand is at its highest.
In addition, traders decided to take profits on the latest bull run.
However, market analysts believe that oil prices will go higher as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) plans to maintain its deliberate approach to adding supply to the market despite strong worldwide demand.
Reports show that the 23-member alliance is likely to stick to an existing deal to add 400,000 barrels per day to its output for November when it meets next week.
In the same vein, OPEC believes that oil demand will rise strongly in the next few years but warned that the world needs to keep investing in production to avert a crunch even as it transitions to less polluting forms of energy.
A continued self-controlled approach to production by US shale drillers and production outages caused by Hurricane Ida also contributed to the upward potential in oil.
According to the US Energy Department, output rose to 11.1 million barrels per day, roughly in line with where production was before Hurricane Ida hit about a month ago but it has failed to recapture the levels seen at the end of 2019 when output rose to almost 13 million barrels per day.
Meanwhile, market analysts have warned that the weakening housing market and the growing power outages may have an effect on China, which is the world’s top oil importer and its second-biggest consumer of fuel after the United States.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 0.40 per cent on Monday, July 13, buoyed by buying interest in 11 Plc, Central Securities Clearing System (CSCS) Plc and UBN Property Plc, which offset the profit-taking in Food Concepts Plc, the parent company of Chicken Republic.
11 Plc gained N20.69 to end at N227.64 per share compared with last Friday’s price of N206.95 per share, CSCS Plc grew by N1.83 to N91.48 per unit from N89.65 per unit, and UBN Property Plc added 1 Kobo to sell at N1.81 per share versus N1.80 per share.
On the flip side, Food Concepts Plc depreciated by 24 Kobo to close at N2.45 per unit, in contrast to the preceding session’s N2.69 per unit.
As a result, the market capitalisation increased by N9.2 billion to N2.587 trillion from N2.578 trillion, and the NASD Security Index (NSI) improved by 15.33 points to 4,311.67 points from 4,296.34 points.
Yesterday, the volume of securities traded by investors surged by 615.9 per cent to 9.1 million units from the previous 1.3 million units, and the value of securities rose by 997.1 per cent to N320.4 million from the preceding session’s N29.2 million, while the number of deals decreased by 12.5 per cent to 28 deals from last Friday’s 32 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 73.9 million units exchanged for N5.2 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Naira maintained stability against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, July 13, at N1,379.65/$1.
However, it appreciated against the Pound Sterling in the official market by N2.44 to exchange at N1,848.18/£1 compared with the previous rate of N1,850.62/£1, and lost 73 Kobo against the Euro to sell at N1,576.39/€1 versus last Friday’s N1,575.66/€1.
At the GTBank fore counter, the Naira declined by N2 to settle at N1,388/$1, in contrast to the previous session’s rate of N1,386/$1, and at the black market, it traded flat at N1,400/$1.
Market analysts expect the Naira to trade within a relatively stable range, supported by sustained FX inflows and a continued market intervention by the Central Bank of Nigeria (CBN), although persistent underlying FX demand is likely to keep depreciation pressures elevated.
According to Monday’s trading data, interbank FX turnover surged by 21.14 per cent to $86.136 million from $71.044 million at the previous trading session on Friday.
However, interbank deal counts declined to 85 from 87 on Monday, reflecting the absence of pressure from US Dollar payments against local units. Last week, total foreign exchange inflows amounted to $0.97 billion, according to a Coronation Merchant Bank research report.
Analysts reported that foreign portfolio investors (FPIs) remained the largest source of inflows, contributing 30.29% or $0.29 billion, closely followed by Exporters and Importers at 30.14 per cent.
Non-bank corporates accounted for 26.49 per cent or $0.26 billion, while the CBN contributed 6.93 per cent or $0.07 billion. Other sources made up the remaining 5.4 per cent of total inflows.
In the cryptocurrency market, major coins came under pressure following heightened expectations for a Federal Reserve interest-rate increase as soon as July, just ahead of key US inflation data and congressional testimony from Chairman Kevin Warsh came into focus.
Bitcoin (BTC) fell by 0.2 per cent to $62,627.03, Solana (SOL) dipped by 1.5 per cent to $75.18, TRON (TRX) depreciated by 0.2 per cent to $0.3248, Ripple (XRP) slumped by 0.6 per cent to $1.06, and Cardano (ADA) lost 0.6 per cent to close at $0.1589.
On the flip side, Ethereum (ETH) appreciated by 0.5 per cent to $1,784.26, Dogecoin (DOGE) grew by 0.2 per cent to $0.073, and Binance Coin (BNB) jumped by 0.2 per cent to $569.23, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Adedapo Adesanya
Brent jumped to $83 per barrel on Monday after the United States announced a fresh blockade that reignited concerns over energy shipments through the Strait of Hormuz.
The international crude benchmark soared by $7.29 or 9.59 per cent to $83.30 per barrel, while the US West Texas Intermediate (WTI) crude gained $6.73 or 9.42 per cent to trade at $78.14 a barrel.
US President Donald Trump announced that he would reinstate a blockade on Iran, forcing traders to once again price in the risk of prolonged disruption to energy flows through the Strait of Hormuz. The blockade, due to begin on Tuesday, will cover Iran’s entire coastline, ports and oil terminals, as well as all vessels regardless of flag.
The US President also said vessels receiving protection while transiting Hormuz would reimburse the country through a 20 per cent charge on cargoes, Reuters reported.
President Trump’s idea would mean that a 20 per cent fee on a supertanker that carries about 2 million barrels of crude at $80 per barrel would be equivalent to around $32 million, or an additional cost of $16 per barrel.
“This is significantly higher than the $1/bbl toll for which Iran has been pushing,” ING’s strategists said.
The proposal was also criticised by the International Maritime Organisation (IMO) because international law does not provide for mandatory transit fees through straits used for international navigation. Energy companies have also rejected similar proposals previously advanced by Tehran, arguing that freedom of navigation remains a cornerstone of global maritime trade.
Iran’s top joint military command had earlier said it would not allow the US to intervene in the management of the strait, and any attempt by the US to transit without its authorisation would be confronted.
Analysts now expect countries to work on ways to permanently bypass the Strait of Hormuz. Goldman Sachs estimated that expanding pipeline capacity in the Middle East could shield more than 60 per cent of pre-war Gulf oil exports from any future Hormuz disruptions by the end of 2028.
The bank’s base-case forecast assumes pipeline capacity bypassing Hormuz will rise by 3.8 million barrels per day by end-2027 and 7.3 million barrels per day cumulatively by end-2028, taking total effective bypass capacity to more than 14 million barrels per day by end-2028.
The Organisation of the Petroleum Exporting Countries (OPEC) has trimmed its 2026 global oil demand growth forecast for the third straight month, even as crude production rebounds across the Gulf and tanker traffic slowly returns to the Strait of Hormuz.
In its monthly oil market report released Monday, OPEC lowered expected oil demand growth this year to 780,000 barrels per day, down another 190,000 barrels per day from last month’s forecast. The producer group still expects stronger consumption than many other forecasters, including the International Energy Agency, and even raised its demand growth estimate for 2027 by 210,000 barrels per day to 1.94 million barrels per day.
