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Nigeria’s Balance of Trade Projected to Hit $3.8bn Next Year

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  • Nigeria’s Balance of Trade Projected to Hit $3.8bn Next Year

Nigeria’s balance of trade is expected to improve from -$0.5 billion to $3.8 billion before the end of next year, the Chief Executive Officer of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, has said.

The balance of trade is the difference between a country’s imports and its exports for a given time period.

Rewane made the forecast in a presentation he delivered at a foreign exchange sensitisation seminar titled: “The Nigerian Foreign Exchange Market- Paving the Way towards Restoring Confidence: A Market Perspective,” that was organised by Access Bank Plc in Lagos on Wednesday.

He however disclosed that Nigeria’s terms of trade in 2017 is now 15.9 as against 18.9 in 2015.

“The oil companies are still compelled to sell their FX to the CBN. The current naira appreciation is as a result of four factors – mainly a sharp increase in our oil revenue estimated at a monthly value of $2.5 billion; a policy shift towards a discriminating crawling peg effectively depreciating invisibles from N305/$ to N360/$; a 16.9 per cent increase in the quantity supplied over first quarter 2016 to $6 billion; and the opening of a new investor/exporters window as a proxy for price discovery.”

He noted that with oil price averaging $52 per barrel and production at 1.8mbpd, revenue would be enough to meet trade finance obligations. According to Rewane, Nigeria will struggle to meet capital and infrastructure funding obligations.

Earlier, the Chief Executive Officer, Access Bank Plc, Mr. Herbert Wigwe, said that recent developments in the foreign exchange market and the attendant impact on the market and businesses at large, necessitated the forum.

“I will like to thank the Governor of the Central Bank, Mr Godwin Emefiele, and his team for the bold and laudable policy directives given in recent times to jump start the Nigerian Economy and reactivate liquidity in the FX market. This not only provides hope for businesses all around Nigeria hereunto incapacitated by the constrained liquidity of the FX market; but also shows clearly the roadmap to bringing the country back as an investment hub of the financial world.

“As a bank, our commitment to the development of the Nigerian financial market is unflinching and deeply rooted in our desire to see a liquid, structured, sustainable and well developed market that is global in its reach and conducive for businesses both great and small,” he added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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OPEC Agrees to Increase Oil Supply by 500,000 Barrels Per Day Ahead of Surge in Demand

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Nigeria's economic Productivity

OPEC and allies finally agreed to ease their 7.7 million barrels per day production cut by 500,000 barrels per day starting from January 2021.

This will now bring the oil cartel’s total production cuts to 7.2 million barrels per day starting from next year.

Oil prices rose after the news as the market believed the approval of Pfizer COVID-19 in the United Kingdom will kick start a series of approvals and helped restore confidence, increase business activities and demand for the commodity across the globe.

After the outcome of the meeting was made public on Thursday, Brent Crude Oil against which Nigerian oil is priced gained 1.35 percent on Friday after gaining 1.4 percent on Thursday to $49.37 per barrel at 11.35 am Nigerian time on Friday.

The US West Texas Intermediate gained 1.29 percent to $46.23 barrel on Friday.

500,000 bpd from January is not the nightmare scenario that the market feared, but it is not what was really expected weeks ago,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. “Markets are now reacting positively and prices are recording a small increase as 500,000 of extra supply is not deadly for balances,” she added.

Investors King increased business sentiment in the energy sector to boost investment, increase activity in the sector and most important improve crude oil demand enough to accommodate the 500,000 barrels per day extra that would be hitting the global market starting from January.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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