Oil recovered this week to $52pb from last week’s low of $47pb. This was driven by the renewed confidence from Saudi Arabia and Russia to extend the output curb to March 2018.
On the domestic front, headline inflation sustained a downward trend albeit a marginally to 17.24% in April from 17.26% in March. Food inflation however increased to 19.30% from 18.44% as the planting season intensifies. The good news is that the price of a bag of rice declined by 14% to N15, 000.
The attached report summarizes the commodity price movements for this week.
Burning Economic Issues
- Oil prices spike to $52pb – Saudi & Russia prefer production cut extension
· National grid generation up by 3.59% to 3948MWh/h
· GE plans 2000MW hydroelectric power in Nigeria
· Diesel down 15% to N170/ltr
· Headline inflation data to be released this morning
· Naira appreciates by 1.04% to N386/$
· Aero plus Arik may be national carrier
Economic News
The Good
· Oil up by 2.44% to $52pb, revenue positive for Nigeria
· Rice price down 14% to N15,000
Power Generation analysis & Impact
May 14th: On grid power output was 3948MWh/hour (up 137MWh/h)
· Total Power constraints: 1744MW due to gas, line and water constraints
· Estimated loss: N1.143bn (annualised at N411.48bn /$1.03bn)
· Improved supply of gas to plants is leading to increased generation, however line constraints at Afam VI persist
· Diesel down 15% to N170/ltr
Domestic Commodity Prices Movement
Stock Market
Oil prices
- Brent crude 2.44% to $52.01pb
· Saudi Arabia and Russia agree to extend output curb to March 2018
· Terms of the existing deal to remain the same according to the Saudi energy minister
Oil markets today
Outlook – oil prices
- Experts expect global glut to be eliminated by the end of 2017 due to output curb extension – WSJ
· Production cuts will be countered by rising production levels in Brazil, Canada and US
· US rig count has increased for 17 consecutive weeks
· US shale still pose as a risk to stable prices
Outlook – agric prices
Grains
· Growing supplies from the Black Sea Region will weigh on prices
Soft
Sugar
· Global sugar exports to exceed demand and thus weigh on prices
Cocoa
· Supplies from Ghana to offset shortfalls from Ivory Coast
