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Oil Prices Climbed Sharply to a 2-year High of $59pb

Proshare

Wednesday, September 27, 2017 / 8:35 AM /FDC

The MPC concluded its fifth meeting of the year and in line with market expectations maintained status quo on all key rates for the 7th consecutive time. 

In the global markets, oil prices climbed sharply to a 2-year high of $59pb due to threats by Turkey to disrupt oil flows from Iraq's Kurdistan region. This development came as a result of the referendum by Kurdistan seeking independence from Iraq. 


Burning Economic Issues  
·        MPC concludes 2-day meeting, status quo maintained

·        Gencos owe banks N356bn ($988.8m)

·        NAFEX window records $1.3bn transactions in one week

·        Oil price up 0.03% to $59pb

·        Diesel retail price sharply higher at 2.7% to N190/ltr

·        Naira gains in the parallel market (N366/$) and NAFEX window (N360.31/$)
 

Economic News

The Good  
·        Oil price is up to a 2-year high at $59pb

·        Increased investor confidence in NAFEX window is exchange rate positive

·        No action on Nigeria's oil output cap till January 2018

·        Palm Oil (25L) price down 11.1% to N12,000

The Bad
·        Diesel price up again

·        Power generation companies in debt


Power Generation analysis & Impact  
September 21st : Average power output was 3417MWh/hour (down 50MWh/h)

·        Gas constraint was 747.5MW; frequency management constraint due to loss of DisCo feeders was 2144MW

·        Estimated loss: N1.39bn (annualised at N506.62bn /$1.26bn)

·        High frequency constraints impeding generation output

·         Alaoji and Egbin ST 6 are now functional



Domestic Commodity Prices Movement





Stock Market

·        NSE ASI 0.37% to 35,358.73pts

·        Consumer goods sub index 0.81% to 931.76pts



Oil prices
·        Brent crude 0.03% to $59pb

·        No decision made at oil producers’ meeting in Vienna

·        Oil producers wait until January 2018

·        US oil production expected to increase by 1mbpd next year- EIA 


Oil markets today





Outlook – Oil Prices    
·        Market in wait and see mode

·        Increasing US oil production will continue to remain a limiting factor to oil price gains

Outlook – Agric Prices

Grains 
·        Larger-than-expected global supplies to drag down prices 

Soft

Sugar
·        Favourable weather conditions will push down prices

Cocoa 
·        Prices to remain soft as harvest season begins early October




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