- Naira’s Depreciation Threatens Adoption of ECOWAS Single Currency
The Economic Community of West African States, ECOWAS, has said the full adoption of a single currency was currently under threat due to the steady decline of Nigeria’s currency, the Naira.
ECOWAS had set 2020 as the year to achieve the adoption of a single currency for the region.
This was the consensus view of members of the Technical Meeting of ECOWAS Macroeconomic Policy Committee on Multilateral Surveillance, during a two-day technical meeting in Abuja yesterday..
Out-going chairman of the committee, Ommy Sar Ndaiye, who noted that the commission had made remarkable progress in its macroeconomic policies, urged the committee to chart the way forward for the economy of member states.
She said the depreciation of the value of the naira and other economic challenges facing member states were affecting the economy of the entire region and also the plans for the adoption of a single currency in the region.
“The depreciation in value of the Naira and other economic factors in Nigeria are affecting ECOWAS. We all know that whatever happens in Nigeria weighs heavily on our economies. If there are challenges there, it would reflect on the region,” she said.
She urged the committee members to look inward and find better ways to strengthen economic ties within the region.
In his remarks, Commissioner of ECOWAS Macroeconomic Policy and Economic Research, Mamadou Traore, while stating that the aim of the session was to take a look at the 2015 report, monitor, evaluate and make appropriate recommendations that would help revive the economy of member states, lamented that “despite efforts by the commission to strengthen the economy of ECOWAS, the economy is still vulnerable to external shocks.”
He urged member states to update their database on a regular basis on measures that would drive economic growth and also furnish same to the commission for proper information.
Libyan Oil Field and Gas Link to Italy Reopen After Protesters Withdraw
Following a brief interruption, operations at an oil field in western Libya and a natural gas link to Italy have resumed as protesters retreated from the facilities.
The demonstrators withdrew after receiving assurances from the government regarding their demands.
The Wafa oil field, which typically produces between 40,000 to 45,000 barrels per day, recommenced shipments after a temporary halt prompted by guards’ demands for improved compensation.
Similarly, the gas pipeline connection to Italy is once again operational, according to sources familiar with the situation who preferred anonymity due to the sensitivity of the matter.
Protests disrupting energy infrastructure and output are not uncommon in Libya.
In recent times, demonstrations have frequently disrupted operations, with the significant Sharara oil field experiencing prolonged suspension last month due to similar protests, invoking a force majeure clause in contracts.
The resumption of activities marks a relief for both the Libyan energy sector and Italy, which heavily relies on the natural gas link for its energy needs.
However, the incidents underscore the ongoing challenges faced by Libya in maintaining stability within its vital energy infrastructure amidst socio-political unrest.
Efforts to address the grievances of protesters and ensure sustained operations remain pivotal for the country’s economic well-being and regional energy dynamics.
Oil Prices Dip on Monday as Dollar Gains
Oil prices experienced a downturn, extending losses from the previous session as the U.S. dollar surged against global counterparts to impact market sentiment.
Brent crude oil, against which Nigerian oil is priced, slipped by 0.2% to $81.48 a barrel while U.S. West Texas Intermediate crude (WTI) declined by 0.3% to $76.27 a barrel.
The upward trajectory of the dollar renders oil more costly for holders of other currencies, contributing to the decline in oil prices.
This downward trend follows a week of losses, with Brent declining approximately 2% and WTI falling over 3%.
Market participants attribute these fluctuations to concerns about inflation potentially delaying anticipated cuts to high U.S. interest rates. Such expectations have been suppressing global fuel demand growth.
Analysts observe a retreat in the risk-on sentiment, coinciding with heightened expectations of prolonged interest rates.
Tina Teng, an independent analyst based in Auckland, notes that the recent market rally led by Nvidia has stalled, as elevated rate expectations bolster the U.S. dollar, thereby pressuring commodity prices, including oil.
Despite geopolitical tensions such as the Israel-Hamas conflict and attacks on ships in the Red Sea, which could have traditionally boosted oil prices, the impact remains modest.
Moreover, investors are monitoring developments surrounding Russian oil supply following recent U.S. sanctions on Moscow’s leading tanker group.
Amidst these uncertainties, Qatar’s decision to increase liquefied natural gas production further adds to global energy supplies.
Crude Oil Dips Slightly on Friday Amid Demand Concerns
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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