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Deutsche Bank Slips Below 10 Euros

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For the first time ever, Deutsche Bank AG’s share price dipped below 10 euros. Traders are preparing for it to fall even lower.

The most-owned bearish option on the German lender is a put with an exercise price of 8 euros. While investors started piling into the position in June, the fact that it’s so popular shows they’re seeking to hedge for further declines. The stock sank as much as 9 percent to 9.90 euros intraday, before paring its slide.

Trading in Deutsche Bank options has surged this month as the lender fell to a fresh record low on growing concerns about its ability to withstand mounting legal costs. Put volume reached a seven-year high on Monday, while the number of outstanding contracts on the firm has climbed to its highest ever.

“A very psychological barrier has been breached,” said Michael Hewson, an analyst at CMC Markets in London. “For a bank such as Deutsche Bank, whose share price in 2008 was light years away from being a single digit stock, to become a single-digit stock — it changes people’s perceptions. If it can drop through 10 euros, then what’s the next target? For Deutsche Bank’s share price to go towards 8 euros — I think that’s perfectly feasible.”

Since their peak in May 2007, Deutsche Bank shares have tumbled 90 percent. More than 83,000 of the 8-euro put that’s the most owned exist, up from about 32,000 in June. The open interest on the contract, which expires in December of next year, has climbed 14 percent since Sept. 6.

On Friday, Deutsche Bank options were among the most traded on Deutsche Boerse AG’s Eurex exchange. June puts with a 10 euro strike and 7.60 euro puts expiring in March were the bearish contracts on the stock that changed hands the most. A 10,000 block of the March options changed hands at the same time as an equal number of March 12.50 euro calls, data compiled by Bloomberg show.

Deutsche Bank spokesman Don Hunter declined to comment on the stock and options trading.

In the latest turn of events, about 10 hedge funds that do business with Deutsche Bank have moved part of their listed derivatives holdings to other firms. Chief Executive Officer John Cryan’s reassurances that the lender has never had as safe a balance sheet in the past two decades wasn’t enough to stop the decline in shares.

As the stock tumbled and investors piled into options, bond traders also increased hedging. The cost of insuring the company’s subordinated debt reached a record this week, while that of credit-default swaps on its senior hit the highest since February, before paring their advance.

Deutsche Bank’s woes have spilled over to the rest of the industry, with a gauge tracking lenders for the region heading for its lowest level since Aug. 22. Commerzbank AG, which said on Thursday it will cut jobs and suspend dividends, dropped 6.1 percent.

As of 1:05 p.m. in Frankfurt, Deutsche Bank shares traded at 10.37 euros, down 4.6 percent.

“If it doesn’t close back above 10 euros today, I would be concerned that we could fall quite a bit lower,” Hewson said.

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 Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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