Oil price plummets amid coronavirus fears and looming price war. Precious metals maintain their safe-haven positions while the agricultural sector remains mixed.
- Last week, oil prices closed at record lows, as global demand continues to slip over the festering impact of the coronavirus epidemic, which was further buoyed by the failure of OPEC+ to agree on the proposed 1.5 million BPD output cut.
- The inability of the planned output cut by the OPEC+ cartel came on the back of Russia’s rejection of the agenda, on the basis that the current slump in global crude oil prices was due to weakening demand as against excessive supply that can be curtailed by output cut. This also drew counter-reaction from Riyadh (the largest producer among the cartel), as she threatened to pump more oil even at a more discount price to prospective.
- As a result, Nigeria’s benchmark crude oil, Bonny Light, fell sharply by 8.22% w/w, to close the week at $46.33/barrel. This development puts Nigeria’s 2020 budget at a risk, given the oil price benchmark of $57/bl set in the budget document.
- This week, we expect oil prices to remain pressured as fears of a price war may further weigh on market sentiment.
- Last week, Wheat prices were down 2.24% w/w to $513. 50 per bushel, amid widespread of Coronavirus beyond China, hampering global demand.
- However, Corn prices increased by 2.93% w/w to $377.25 per bushel, despite continuous rise Coronavirus beyond China.
- Cocoa prices also increased by 0.86% w/w to $2,702.00/MT, despite adverse weather conditions limiting global supply.
- Sugar prices was down by 9.96% w/w to $13.02/lbs amid weather constraints in South Africa and the US.
- Gold and silver prices closed higher w/w by 6.75% and 5.05% to $1,672.40/oz and $17.21/oz respectively, maintaining their safe have to position amid the COVID-19 epidemic.
- We expect precious metal prices to remain on the high this week as the world battles the coronavirus epidemic and its accompanied impact on businesses and mainstream investments.
DOMESTIC COMMODITY PRICE MOVEMENT IN NIGERIA
GTI Securities Research