Oil Prices Fall by 2.87% as Oil Producers Fail to Reach an Output Agreement

Oil & Gas
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Friday, April 15, 2016 10:20AM /FDC

Oil prices fell by 2.87% on Monday after key oil producers failed to reach an output agreement in Doha. A coincidental oil workers strike in Kuwait helped oil markets which lost over 5% in the first hour of trading on Monday.


Brent is now trading at $43.77pb, which is 15% above Nigeria’s budget benchmark of $38pb. Hopefully, next week, we should expect some reprieve in the domestic macroeconomic environment if oil prices are sustained at this level.


This commodity update highlights key events and provides a brief analysis of the implications of these price movements and forecasts for the week ahead.

Domestic Commodity Prices Stable

Domestic Prices

•Domestic prices have remained fairly stable

•Inflationary pressures to remain as scarcity lingers

•Currency swap initiative expected to dampen domestic prices

•China accounts for 25.6% of Nigeria’s import

•Imported inflation unlikely as China’s inflation remained flat at 2.3% in March


Stock Market

•Unilever PAT Q1’16 up 20.4% to N1.04bn

•Cost increased by 9.14% to 10.75bn



Oil Price Movement

• Brent crude down 2.87% to $42.91pb

• Key producers failed to negotiate a curb on their output

• Oil prices seem to have taken the news from Doha in stride

• Production continues to even out without a production freeze

• Oil workers strike slashes Kuwait’s production 1.1mbpd

• US Oil rig count feel by 3 to 351 last week

• Supply disruptions in Iraq and Nigeria supported prices


Oil Markets Today


Currency Pegs & Depleted Reserves



Cost of Producing a barrel of Oil and Gas




Agric Commodities




•Nigeria’s oil production declined further to 1.68mbpd from 1.74mbpd in March - OPEC


•Total OPEC production increased marginally by 0.05% from 32.24mbpd to 32.25mbpd

• Oil price unlikely to revisit lows due to shrinking U.S production and continued growth in demand

• Oil prices may maintain gains if U.S inventory data glides downwards



•Wheat prices to remain bullish as FAO projects a 3% decline in world output

•Bullish outlook for corn futures as La Nina weather patterns develop



Sugar – Distortions in Brazil expected to initiate supply disruptions

Cocoa – Gains unlikely to be sustained as weak demand data outweighs tighter supplies


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