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Asian Stock Outlook Burnished With Oil Above $40 on Weak Dollar

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Euro Weakens

Asian stock were on track for their longest run of weekly gains in 1 1/2 years as a resurgence in crude oil prices melds with a dovish Federal Reserve to bolster appetite for riskier assets. The dollar lingered near an eight-month low.

Mining and energy shares drove Australia’s benchmark to its highest level since the start of January, and index futures in South Korea and Hong Kong signaled gains after the Dow Jones Industrial Average erased its 2016 losses. Osaka-traded Nikkei 225 Stock Average futures were down, however, as the greenback maintained declines versus the yen to Australia’s dollar. The Bloomberg Dollar Spot Index was near its lowest closing level since June and forward contracts on Asian emerging-market currencies foreshadowed further gains. U.S. crude held above $40 a barrel, close to its highest.

The revival in equities moved on to a more solid footing this week as the Fed reduced the number of interest-rate hikes it expects to enact in 2016 amid concern over a global slowdown and its impact on the U.S. economy. Oil’s more than 50 percent recovery from an almost 13-year low reached just five weeks ago has underpinned a revival in risk assets, burnishing sentiment among traders bruised from the volatile start to the year. Despite stimulus moves in Japan and the euro area having a mixed impact on markets, policy makers pressed ahead this week, with the Fed’s dovish comments followed by rate cuts in Norway and Indonesia. The Bank of England held its rate at a record low.

“Markets are still settling down after the more-dovish-than-expected Fed,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients. “It appears FOMC members have become more concerned with the outlook for the global economy. Markets, of course, started the year with their own case of the jitters, but have shown a little more stability of late. Are central bankers therefore just a little late to the party? Or do they know something that we don’t?”

China reports on property prices Friday, and a gauge of consumer confidence in New Zealand is due. Japan updates on store sales and Thailand issues data on foreign reserves, while the Philippines reports on the balance of payments.

Stocks

Australia’s S&P/ASX 200 Index climbed a third consecutive day, adding 0.9 percent as of 8:48 a.m. Tokyo time following the bounce in commodities. Prices for iron ore, the country’s biggest export earner, rose 4.7 percent Thursday, with Bloomberg’s Commodity Index jumping 2.1 percent to its highest level since Dec. 4. New Zealand’s S&P/NZX 50 Index increased 0.3 percent, headed for a weekly advance of 1.1 percent, also its fifth straight gain.

Dow Average futures were up 0.2 percent with those on the Standard & Poor’s 500 Index after last session’s gains of at least 0.7 percent in those indexes. Contracts on the Kospi index in Seoul added 0.3 percent in most recent trading, while those on Hong Kong’s Hang Seng and Hang Seng China Enterprises indexes rose at least 0.2 percent.

In Japan, the outlook was less clear, with yen-denominated futures on the Nikkei 225 Stock Average climbing 0.4 percent to 16,770 after slipping 0.8 percent the previous session. In the Osaka pre-market, Nikkei 225 futures were bid for 16,780, down from 16,820 at their close on Thursday, while Singapore-traded contracts lost 0.5 percent to 16,730.

The yen, which typically moves at odds with Japanese stocks, was little changed at 111.32 per dollar after climbing 1 percent on Thursday. The currency is set for a weekly advance of 2.2 percent, the most in a month.

“There’s concern for exporters’ earnings,” Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo, said by phone. “If the yen’s trading around 114 to the dollar than companies will expect profits next fiscal year, but when its 110, most exporters will post losses.”

West Texas Intermediate oil rose 0.2 percent to $40.33 a barrel, on track for a weekly climb of 4.8 percent following Thursday’s 4.5 percent surge.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns

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Crude oil

Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.

Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.

The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.

This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.

While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.

Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.

Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.

Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.

Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.

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Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm

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Dangote Refinery

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.

Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.

The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.

However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.

Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.

He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.

Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.

The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.

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Energy

NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade

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Mele Kyari - Investors King

The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.

Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.

Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.

In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.

Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.

He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.

Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.

In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.

Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.

The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.

As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.

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