Commodity Prices Maintain Upward Trajectory as Forcados Terminal is Set to Resume Operations


Wednesday, June 07, 2017 / 4:48 PM /FDC

Commodity prices have maintained their upward trajectory this week with further spikes in the price of garri and beans. Garri has increased by 23% to N32, 000 while beans has increased by 18% to N26,000.

Oil prices continue to trend downwards to $49.24pb, despite news of severed relationships between four Arab nations and Qatar. On the bright side, Forcados terminal is set to resume operations thereby increasing Nigeria's oil production by approximately 300,000bpd.

Burning Economic Issues
       Oil price falls to $49.25pb

        4 Arab oil countries cut diplomatic ties with Qatar

        Forcados terminal to resume with capacity of 300,000 bpd

        NSE market cap. reaches an 11-month high of N11.2trn

        NAFEX window attracts over $1bn deals in the past 6 weeks

        Naira appreciates to N370/$, NAFEX at N378/$

        Diesel remains flat at N180/ltr

Economic News

The Good
        Oil production expected to increase to support external reserves

        Forcados pipeline will improve power (associated gas)

The Bad
         Spot oil price getting close to benchmark

         Delay in budget signing could impede growth

         Power output declines to 3,345MW/hr (down 289MW)

         Garri up by 23% on herdsmen attack on cassava farms

         Beans prices spike on fasting & seasonal effects

Power Generation analysis & Impact  

June 4th: Average power output was 3,345MWh/hour (down 289MWh/h)

         2,895MW lost from gas, line and high frequency constraints

         Estimated loss: N1.39m (annualised at N500.4bn /$1.25m)

         Increasing high frequency constraints due to grid indiscipline

         Affecting generation at Afam VI, Jebba and Shiroro


Domestic Commodity Prices Movement   



Stock Market

         NSE ASI 3.85% to 32,578.38pts

         Positive sentiment drives market performance


Oil prices
         Brent crude 2.73% to $49.25pb

         As US leaves the Paris climate agreement

         Global production levels continue to cap gains from oil prices

         US oil output has surged to 9.3mb over the past 8 months

         Cut in ties between 4 Arab nations and Qatar

Oil markets today 


Outlook – Oil Prices  

         Paris agreement means more shale oil

         Oil price volatility to continue

         Middle East crisis could deteriorate

Outlook – Agric Prices 

     Market expected to trade bullish as weather conditions are expected to drive market sentiment


     Expectations of a bullish sugar market to persist on lower global output

      Cocoa price to edge higher as Ivory Coast farmers neglect plantation

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