The Nigerian Stock Exchange’s market capitalisation fell by N4bn as 23 stocks depreciated at the close of trading on the Exchange’s floor on Wednesday.
The NSE market capitalisation slid to N9.699tn from N9.703tn, while the All-Share Index closed at 28,236.23 basis points from 28,248.86 basis points.
A total of 159.046 million shares valued at N1.454bn were trading in 3,237 deals.
The industrial goods sector weighed most on the ASI following declines in Lafarge Africa Plc to the tune of 2.02 per cent and Dangote Cement Plc by 0.27 per cent.
While the consumer goods sector extended its four-session gaining streak on the back of 1.36 per cent advance in Nigerian Breweries Plc shares, 4.59 per cent appreciation in GlaxoSmithkline Consumer Nigeria Plc and 2.80 per cent rise in Champion Breweries Plc share prices.
The oil and gas sector remained in negative territory due to 7.71 per cent loss in Oando share price and 2.75 per cent fall in Total Nigeria Plc shares.
The financial services sector fell by 0.07 per cent following mixed closes across players. Stanbic IBTC Group Plc shares appreciated by 3.16 per cent, Zenith Bank Plc by 1.15 per cent; while the share prices of Wema Bank Plc and Union Bank of Nigeria Plc declined by 4.35 per cent and 2.44 per cent respectively.
Market breadth remained even with 23 advances and 23 declines.
On the global front, Asian markets traded mixed amidst a relatively stronger Yen, whilst European stock traded higher as oil prices rose following a surprise decrease in the United States crude inventory. The US markets are set to open higher ahead of a barrage of Fed speakers.
On what will shape the next trading session, analysts at Vetiva Capital Management Plc, said, “The sustained even market breadth and persistent mixed performances across key sectors somewhat underscore that investor sentiment remains mixed. We believe this would continue to drive sideways trading in the sessions ahead.
Amid relatively unchanged liquidity, the interbank call rate moderated slightly to 14.67 per cent, representing a fall by 50 basis points. In the foreign exchange interbank market, the naira depreciated by one kobo to close at N312.99 while the one-year forward remained unchanged at N351.60.
Sentiment turned bearish in Wednesday’s session as yields on fixed income instruments trended upwards. In the Treasury bills space, yields climbed 20 basis points on average amid sell pressure on mid-dated maturities.
In particular, yields on the 148 day-to-maturity, 176DTM, and 225DTM bills closed at 19.83 per cent, 19.24 per cent, and 20.31 per cent respectively.
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
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