Headline inflation dipped 0.02% to 17.24%, however, consumers say they do not feel any relief yet. Some are even asking for a 311% increase in the minimum wage to N56,000. All of this is because retail prices have been sticky downwards.
Burning economic issues
- Crude continues to retreat despite OPEC extension announcement
- Currently trading at $52.10pb
- Production is challenged as Forcados repairs take longer than expected
- Currency reserves slide to N382
- Oil marketers grumble renewed build up in arrears
- Diesel price reverses trend, trading lower at N175
- External reserves also trending lower at $30.49bn
- Impact on commodity prices not yet apparent
Good news
- Potential for a more balanced oil market
- Feeding into high forex and fiscal earnings
- Power at the grid continues to recover, currently at 3769MW/hr
Bad News
- Political priorities might come at an opportunity cost to economic recovery
Power Generation analysis & Impact
May 28th:
- Average power output was 4,005MWh/hour (up 237MWh/h)
- 1,830MW for gas, 147.5MW line, 160MW high frequency and 90MW water constraints
- Estimated loss: N1.07bn (annualised at N390.55bn /$1bn)
- Shiroro is restored to functionality
- Gbarain NIPP is still down due to tripping of Alaoji/Owerri 132kV line
Domestic Commodity Prices Movement
Stock Market
Outlook – Oil prices
- US output data to put cap on major trading activity this week
- As investors await production and inventory data
- Therefore prices to trade relatively bearish
- Analysts believe that impact of cut extension should hit the market Q3’17
- However, extent of rally is limited
Oil markets today
Outlook – Agric. prices
Grains
- Strong demand from Asia to offset increased grain exports.
Softs
SUGAR
- Expectations of a bearish sugar market to persist this week
COCOA
- Bearish price trend to persist well into 2019 following oversupply
Source: FDC
