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Oil Producers Maintain Output Curbing Till March 2018

Proshare

Friday, May 26, 2017 / 6:14 PM /FDC

The world’s oil producers agreed to maintain an output curbing deal till March 2018. This is good news for Nigeria – a major beneficiary of the oil cut exemption.


However, oil prices slipped to $52pb as the market expected deeper cuts. The potential impact of the improved oil earnings on the domestic economy will be felt in the near future.


The attached report summarizes the commodity price movements for this week.
 

Burning Economic Issues  

·         OPEC & non-OPEC agree on oil cut extension

·         Oil slides to $52pb

·         FG sets up minimum wage panel

·         Real GDP contracts 0.52% in Q1

·         Naira climbs to N380/$

·         I/E window flat at N382/$

·         Gala price crashes to N50

·         Diesel price flat at N165 per liter  

Economic News  

The Good  

·         OPEC extends output cut for 9 months

·         Naira appreciates marginally

 

The Bad

 

·         Recovery still tepid and prolonged

Power Generation analysis & Impact  

May 23rd : Average power output was 3656MWh/hour (up 390MWh/h)

·         Total power constraints : 2423MW for gas, line and water constraints

·         Estimated loss: N1.163bn (annualised at N424.5bn /$1.1bn)

·         Shiroro is back on after being shut down due to constraints

·         Gbarain NIPP down due to tripping of Alaoji/Owerri 132kV line

·         Egbin ST 6 is out for maintenance and Jebba is reporting water constraints   



Domestic Commodity Prices Movement   



 

 Stock Market 

·         NSE ASI 0.69% to 28,286.43pts
·         All sub sectors gained due to improved market sentiment



Oil prices

·         Brent crude 3.48% to $52.08pb

·         OPEC agree to extend oil cut policy till March 2018

·         Markets disappointed as Saudi Arabia ruled out deeper cuts

·         EIA reported a 4.4mb drawdown in US crude supplies

·         US production soared by 10% since mid 2016 to 9.3mbpd


Oil markets today 

 



Outlook – Oil Prices    

·         Outcome from OPEC meeting will determine prices

·         Gains may be undermined by rising US production

·         Break-even cost for some US producer range between $35 - $40pb


Outlook – Agric Prices 


Grains   

·         Prices will be determined by supply/demand dynamics and weather developments


Soft


Sugar

·         Forecast of improved weather in Brazil and weak global demand will weigh on prices

Cocoa 

·         Prices expected to remain weak as oversupply from West African producers persist  


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5.      Retail Prices Remained Stubbornly Static as Naira Strengthened at the New Forex Window

 

 

 

6.      Commodity Retailers Leave Retail Prices Unchanged

7.      Oil Prices Took a Hit as Naira Converged Below N400 to a Dollar

8.     Retail Commodity Prices Remained Relatively Unchanged as Manufacturers Capitalize on Margins

9.      The Impact of CBN's Intervention on Commodity Prices Not Yet Seen

10.  The Impact of Global and Domestic Developments on the Commodity Markets

11.   Naira Recovers by 5 percent in 2 days to N495 to 1$; Oil Trades at $57pb

12.  Are The Economic Realities of 2016 to Persist in 2017?

13.  Increasing Consumer Resistance and Declining Income Is Taking Its Toll on Retail Prices

14.  Consumer Effective Demand Negatively Affected By Festive Spending

15.   Domestic Commodity Prices Have Reached Their Peak

16.  Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards

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18.  Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder

19.  Retailers Brace up for a Bleak Christmas

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