Economy
Tight Global Supplies Continue to Lift Oil Prices
By Adedapo Adesanya
Oil prices rose on Monday as tight global supplies outweighed worries that demand would be pressured by a flare-up in COVID-19 cases in Beijing and more interest rate hikes.
Brent crude rose 26 cents or 0.23 per cent to settle at $122.27 a barrel and the United States West Texas Intermediate crude rose 25 cents or 0.22 per cent to settle at $120.93 a barrel.
The market was bullish yesterday as oil supplies are tight, with the Organisation of the Petroleum Exporting Countries (OPEC) and allies unable to fully deliver on the pledged output increases because of a lack of capacity in many producers.
This is happening as the US and the European Union (EU) have announced sanctions on Russian energy following its February invasion of Ukraine.
Unrest in Libya has also slashed output, supporting prices.
In the latest from the African state, a blockade of Libyan oil output by groups aligned with forces in the east of the country expanded last week with the closure of two more export terminals, a threat to close another, and reduced production at a major field.
Last Thursday exports were halted at the ports of Ras Lanuf and Es Sider and a day after, a group urged the closure of Hariga port. Engineers at Sarir field said production had been reduced.
Previous periods of political tension in Libya have frequently involved shutdowns of oil output or exports by various forces.
On the demand end, the parts of China imposed a new lockdown restriction and announced a round of mass testing for millions of residents.
China’s zero-COVID policy with immediate partial lockdowns to halt the spread of the virus and mass testing for millions of residents will spook the market.
Concern about further rate hikes in the world’s largest oil producer heightened by Friday’s US inflation data showing the consumer price index rose 8.6 per cent last month, also pressured oil lower.
In Europe, a familiar source eased any worries of an interest rate hike on Monday, saying that European Central Bank interest rate hikes were not the right way to curb surging price rises.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
By Dipo Olowookere
The 0.22 per cent decline in the banking sector could not bring down the Nigerian Exchange (NGX) Limited at the close of business on Thursday, Business Post reports.
The sector witnessed profit-taking during the trading session but the gains recorded by the others ensured that Customs Street maintained its upward movement by 0.25 per cent yesterday.
The energy index improved during the session by 2.74 per cent, the insurance counter expanded by 0.82 per cent, the industrial goods industry rose by 0.62 per cent, and the consumer goods sector went up by 0.32 per cent.
Consequently, the All-Share Index (ASI) grew by 250.91 per cent to 98,760.59 points from 98,509.68 points and the market capitalisation increased by N152 billion to N59.867 trillion from N59.715 trillion.
Investor sentiment remained bullish on Thursday as the bourse ended with 30 appreciating shares and 21 depreciating shares, implying a positive market breadth index.
The duo of Tantalizers and Conoil gained 10.00 per cent each to sell for N1.76 and N387.20, respectively, Custodian Investment soared by 9.92 per cent to N13.85, Africa Prudential gained 9.79 per cent to quote at N15.70, and Golden Guinea Breweries went up by 9.75 per cent to N7.88.
Conversely, DAAR Communications lost 8.47 per cent to settle at 54 Kobo, Caverton plunged by 8.16 per cent to N1.80, Omatek tumbled by 7.46 per cent to 62 Kobo, ABC Transport crashed by 7.41 per cent to N1.25, and Consolidated Hallmark slipped by 7.11 per cent to N2.22.
It was quite a busy day yesterday at the NGX as market participants engaged in transactions ahead of the festive holidays, with the trading volume, value and number of deals rising by 52.98 per cent, 9.23 per cent, and 4.54 per cent, respectively.
This was because investors transacted 489.7 million stocks valued at N7.1 billion in 8,304 deals during the trading day compared with the 320.1 billion stocks worth N6.5 billion traded in 7,943 deals a day earlier.
Topping the activity log was FCMB with the sale of 77.6 million equities for N698.7 million, eTranzact exchanged 70.1 million shares worth N473.4 million, Haldane McCall transacted 47.8 million stocks valued at N234.3 million, Japaul exchanged 33.6 million equities worth N73.8 million, and Secure Electronic Technology traded 16.8 million stocks valued at N8.8 million.
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