Economy
Renewed Demand, Rising Supply to Impact Bullish Oil Trends
By Adedapo Adesanya
Oil prices marked another week of bullish return last week largely supported by data from the United States government which showed a drop in inventories.
However, the market edged lower, later on, giving up some of the week’s gains. Prices were capped by doubts about demand recovery due to the COVID-19 pandemic and rising supply.
This week, the ongoing uncertainty around demand caused by the COVID-19 pandemic and the possibility of higher global output could keep a cap on prices.
The Energy Information Administration (EIA) reported that US crude oil, gasoline and distillate inventories fell last week as crude production dropped sharply and refiners ramped up production. The most supportive news in the EIA report was the drop in US crude output to 10.7 million barrels per day from 11 million barrels per day in the previous week.
This helped to lift the market but the uncertainty surrounding the market especially when world oil demand will fall more steeply in 2020 than previously forecast due to the coronavirus as shown by two credible sources, which in addition showed that there are doubts about next year’s recovery.
The Organisation of the Petroleum Exporting Countries (OPEC) forecast noted that the global oil demand will tumble by 9.06 million barrels per day more than the 8.95 million barrels a day decline expected a month ago.
A day after, the Paris based International Energy Agency (IEA) also lowered its global oil forecasts for the first time in several months as the number of COVID-19 infections remains high and amid ongoing weakness in the aviation sector.
The IEA said it now sees global oil demand for 2020 at 91.1 million barrels per day reflecting a fall of 8.1 million barrels per day year-on-year. The revised forecast is 140,000 barrels daily lower than the IEA’s previous projection.
Although there are no expectations for the oil futures to go below the $40 level, traders are having a hard time extending the rally because of lingering demand concerns. This is happening despite production cuts in the US but as OPEC+ gradually raises output, this means an increase in global supply.
The inability of Congress to reach an agreement on additional stimulus measures could weigh on prices this week because the news has the potential to negatively affect demand. US policymakers are not expected to revisit the issue until after September 7 when they return from their summer recess. An emergency meeting could be called but as at the time of this report, it has not been discussed.
Economic data last week was supportive for crude oil, but the numbers from July reflected an economy that was being supported by government aid. The longer the economy goes without additional stimulus, the worse the numbers could be for August. This concern could weigh on demand and prices this week.
As at now, prices are higher, lifted by China’s plans to ship in large volumes of US crude in August and September, outweighing the major concerns.
At the time of filing this report, Brent crude rose 21 cents or 0.5 per cent to $45.01 a barrel while the US West Texas Intermediate (WTI) crude was up 27 cents or 0.6 per cent to $42.28 a barrel.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) is seeking a reduction in import duty exemptions, which rose to N34 trillion, limiting its ability to increase its revenue generation threshold.
The Comptroller-General of the Customs Service, Mr Adewale Adeniyi, disclosed that the value of import duty exemption certificate approvals increased to that level in 2025, describing the policy as one of the major factors restricting its revenue generation.
At an investigative session of the Senate Committee on Finance with revenue-generating agencies in Abuja on Monday, Mr Adeniyi explained that government fiscal policies have continued to impact the revenue-generating capacity of the Customs Service, both positively and negatively.
“The NCS would have generated significantly higher revenue over the years if not for government-approved import duty waivers and other external factors affecting collections,” he said.
He added that the Import Duty Exemption Certificate scheme, introduced in March 2020, accounted for about N34 trillion in approvals in 2025, with nearly 60 per cent covering duty-free importation of military hardware due to Nigeria’s prevailing security challenges.
Other government-backed duty waivers, he noted, covered the importation of Compressed Natural Gas (CNG), electric and hybrid vehicles, healthcare equipment and medical supplies, industrial machinery and manufacturing inputs, as well as food import intervention programmes.
While acknowledging the impact of the waivers on Customs revenue, Mr Adeniyi argued that fiscal policy should not be assessed solely on the basis of revenue generation but also on its broader economic and social objectives.
He, however, urged the federal government to establish stronger monitoring mechanisms to ensure beneficiaries of duty waivers deliver the intended economic outcomes, including lower consumer prices, increased local production and improved healthcare access.
The committee also expressed displeasure over the absence of several heads of government agencies invited to the hearing, including the Nigerian Civil Aviation Authority (NCAA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Industrial Training Fund (ITF), and the Federal Medical Centre (FMC), Jabi.
The Chairman of the Senate Committee on Finance, Mr Sani Musa, warned that the affected chief executives must appear at the committee’s next sitting or face severe sanctions under the Senate’s rules.
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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.
