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Rise in Crude Oil Price to Boost Nigeria’s Revenue by 8.7%

Proshare

Monday, October 10, 2016 9.18am /fdc

Brent oil, the proxy for bonny light crude crossed the $50pb level to $52pb. This will effectively boost Nigerian oil revenue by approximately 8.7%.

Coincidentally, the naira appreciated by 1.05% in the parallel market to N470/$.

Flour millers have jacked prices up 1.8% to N11,000 per 50kg. This means that you are most likely going to be paying more for a loaf of bread very soon.

Burning Economic Issues

• Nigeria announced a 16% increase in budget 2017 at N6.86trn

• In U.S dollar terms - 25% lower than 2016 budget

• Deficit projected at N2.7trn

• FGN offers 2 presidential jets for sale

• 8 institutions shortlisted as advisers for the $1bn Eurobond issue

• Naira appreciates to N470/$ - Parallel market

• Banks buying to cover short position resulting from NNPC refund

• Airlines offering seasonal promos & discount fares  

Impact on Commodity Prices
• Staple food prices ease on expected bumper harvest

• Imported food items remain sticky downwards

• Nigeria’s rice consumption projected at 5.25mmt

• 50% higher than local production

• Diesel prices flat at N190/liter  

Domestic Commodity Prices



Consumer Goods - No Change


Stock Market
•NSE ASI down marginally by 0.70% to close at 27,835.2pts

•Weak trading in the equities market



Oil Market Today



Oil Prices touches 4-month high

• Brent crude 2.97% to $52.38pb

• WTI 2.24 % to $49.78pb

• OPEC’s optimism to stabilize oil market supports prices

• U.S crude stockpile down by 3mb

• Declining for the 5th consecutive week, despite refineries seasonal maintenance

• Gasoline inventories up 220,000 barrels, distillates stockpile down 2.4mb



Outlook
• We expect prices to hover around $48pb – $51pb

• Details on OPEC oil deal will be discussed in Vienna meeting next month

• Prospects of increased output from Iran, Nigeria and Libya may exceed new target range (32.5 – 33mb/d)

• Traders will keep a close watch on rising U.S rig counts  

Grains

• Grain futures are determined by weather patterns and supply/demand dynamics

• Record high global inventories will weigh on prices  

Soft

SUGAR

• Production in India (a net importer) is expected to decline by 6.8% to 23.4mt in 2016/17  

COCOA

• Prospects of favourable weather conditions in West Africa will ease prices  
Related News
1.       Commodity Prices Remain Relatively Unchanged
2.      Domestic Commodity Prices Tick Upwards In Spite of Expected Harvests
3.      Naira Depreciates to N407/$ in the Parallel Market; Impact on Imported Commodities to be Felt in Sep
4.      Consumers Are Resisting Price Increases in the Retail Market - FDC
5.      Continuing Slide of the Naira Leading to Higher Prices of Inelastic Commodities
6.      Receding Weather Shocks Hand baton to Fundamentals
7.      Domestic Commodity Prices Remain Fairly Stable
8.     Potash Price Surge Could Lead To Higher Food Costs For Billions
9.      Domestic Commodity Prices Declining in the Last 24hours - FDC
10.  Uranium Prices Set To Double By 2018
11.   Billionaire Investors Back a Gold Price Rally In 2016 

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