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CBN Settles $152.48m Forex Futures on FMDQ

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FMDQ Group - Investors King

The second over-the-counter foreign exchange futures contract (NGUS AUG 24 2016) with notional amount of $152.48m at $/N310, matured and was settled on the FMDQ platform.

This development, FMDQ explained in a statement on Thursday, was in line with the OTC Forex Futures Market Framework and the FMDQ OTC Forex Futures Market Operational Standards, trading on the NGUS AUG 24 2016 contract which ceased on August 16, 2016.

It was valued on August 24, 2016 by FMDQ OTC Securities Exchange against the Nigerian Inter-Bank Foreign Exchange Fixing spot rate. Clearing operations and settlement for the final amounts, were effected through the Nigeria Inter-Bank Settlement System Plc, in its capacity as the FMDQ-designated clearing agent for the margining and settlement of the OTC forex futures contracts

The August 24, 2016 matured contract was replaced by the CBN with a new 12-month contract, NGUS AUG 16 2017, with a notional amount on offer of $1bn at $/241. In addition, the CBN refreshed its quotes and published new rates on the existing one-month to 11-month contracts as shown on the FMDQ website

Over $2.40bn worth of the OTC forex futures contracts offered by the CBN, across all the tenors, with the profile of the contract buyers including authorised dealers, foreign portfolio investors and importers, among others, have been traded.

The significant increase in turnover clearly shows the receptiveness of the transaction counterparties and end-users to the product, FMDQ affirmed.

The Naira-settled OTC forex futures product, according to the Exchange, has continued to pave the way for corporates to enhance business planning whilst effectively hedging their forex risk, even as the CBN continues to position and empower stakeholders towards a vibrant forex market

The naira-settled foreign exchange futures market on the FMDQ over-the-counter Securities Exchange would boost liquidity, transparency, price formation and diversification in the foreign exchange market, making the market globally competitive, the Deputy Governor, Economic Policy, Central Bank of Nigeria and Chairman, FMDQ, Dr. Sarah Alade, had said.

With this development, the CBN has become the pioneer seller of the naira-settled OTC forex futures contracts on the FMDQ platform.

At the launch of the scheme, Alade said, “This innovative product will bring liquidity, transparency, price formation and diversification into the forex market, making the market globally competitive. FMDQ, the market organiser and the OTC Forex Futures Exchange, in collaboration with the CBN and other stakeholders, is adequately equipped to deliver the needed transformation in the Nigerian financial market.”

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

Crude Oil Dips Slightly on Friday Amid Demand Concerns

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Crude oil gains

On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.

Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.

Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.

The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.

This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.

Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.

Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.

While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.

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Commodities

Nigeria’s Petrol Imports Decrease by 1 Billion Litres Following Subsidy Removal

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Ship Aveon Offshore

Nigeria’s monthly petrol imports declined by approximately 1 billion litres following the fuel subsidy removal by President Bola Ahmed Tinubu, the National Bureau of Statistics (NBS) reported.

The NBS findings illuminate the tangible effects of this policy shift on the country’s petroleum importation dynamics.

Prior to the subsidy removal, the NBS report delineated a consistent pattern of petrol imports with quantities ranging between 1.91 billion and 2.29 billion litres from March to May 2023.

However, in the aftermath of Tinubu’s decision, the nation witnessed a notable downturn in petrol imports, with figures plummeting to 1.64 billion litres in June, the first post-subsidy month.

This downward trend persisted in subsequent months, with July recording a further reduction to 1.45 billion litres and August witnessing a significant decline to 1.09 billion litres.

August’s import figures represented a decrease of over 1 billion litres compared to the corresponding period in 2022.

The NBS report underscores the pivotal role of the subsidy removal in reshaping Nigeria’s petrol import landscape with the Nigerian National Petroleum Company emerging as the sole importer of fuel in the current scenario.

Despite higher petrol imports in the first half of 2023 compared to the previous year, the decline in June, July, and August underscores the profound impact of subsidy removal on import dynamics, affirming the NBS’s latest findings.

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Crude Oil

Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO

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Nigeria oil rig

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.

Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.

Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.

He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.

Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.

The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.

Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.

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