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Diesel Prices Increased by 20.4% Despite the Improvement in on-grid Power Generation

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Wednesday, October 25, 2017 / 8:40 AM /FDC

Diesel prices have climbed 2.5% in the last week. Cumulatively, it has increased 20.4% despite the improvement in on-grid power generation. 

Domestic commodity prices have been oblivious to the diesel price spike due to the bountiful harvest season.
 

Burning Economic Issues
  

·        N586m spent daily on fuel subsidy – annualized at N213bn (Vanguard)

·       
46m bank accounts without BVN

·       
2018 Budget to be presented at FEC

·       
Trump to decide on Fed chairperson

·       
Brent crude up 0.21% to $57.49pb

·       
Parallel market flat at N363/$

·       
Diesel price up 2.5% to N205 per litre

Economic News
  

The Good
  
·       
Improved on-grid power generation at approximately 4000MW

The Bad
·        Diesel price climbs to a 6-month high

·       
Frozen accounts to drain liquidity out of the banking system


Power Generation analysis & Impact
  
October 23rd : Average power output sent was 3998MWh/hour (up 167MWh/h)

·       
Gas constraint was 298MW; frequency management constraint due to loss of DisCo feeders was 1801MW

·       
Estimated loss: N1.008bn (annualised at N367.92bn /$0.91bn)

·       
Improved generation with improvements in gas supply 


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Domestic Commodity Prices Movement
 
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 Stock Market 
·        NSE ASI 0.48% to 36,411.73pts

·       
Consumer goods sub index 0.19% to 922.53pts

·        
Mixed sentiments driving market down

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Oil Prices
·        Brent crude 0.21% to $57.49pb

·       
US oil rigs fell by 7 to 736- Baker Hughes (week to Oct 20)

·       
Nigeria’s oil rig count remained flat at 8 - September

·       
Tension in the Middle East reduces supply flows from Iraq

·       
Increasing oil demand from India and China
 

Oil Markets Today
  
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Outlook – Oil Prices    
·        Oil prices to remain above $55pb in October on lower supply in the Middle East

·       
Tightening US market to drive price higher

Outlook – Agric Prices
Grains

·        Grain prices to trade bearish on favorable weather Forecast

Soft

Sugar
·        Lowering demand expected to weigh on prices 

Cocoa 

·        Prices expected to trade bearish on increased sunshine in Ivory Coast

Related News
1.       Domestic Commodity Prices Responding to the Increased Harvest Output
2.      Harvest Season Has Begun; Expected to Increase Supply and Moderate Prices
3.      Price of Cement is up 8% to N2,700 while Brent Slipped to $56.34pb
4.      Domestic Price of Palm Oil Has Declined by 25% in 12 Months
5.      FG to Bring Down the Price of a 50kg Bag of Rice to N9,000 Within a Month
6.      Price of Cement Dropped by 3.8% to N2,500 per Bag
7.      Oil Prices Climbed Sharply to a 2-year High of $59pb
8.     Cashew Nut Exports Increased Significantly by 463% to $37m in Q2’17
9.      Volatile Oil Prices in August
10.  Oil Prices Hovered Around $55pb Ahead of OPEC Meeting
11.   Higher Price of Oil Has More Than Compensated for Any Cocoa Shortfalls
12.  Oil Price Up to $54.16pb Due to Lower OPEC Production
13.  BUA Group Additional Investment Likely to Drive Cement Price Downwards
14.  Commodities Market Exports – Brent Crude Traded Bullish in the 2nd Half of August

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