Markets

Asia Stocks Edge Higher; Oil Gains for Eighth Day

Published

7 years ago

July 3, 2017

Asia Stocks Edge Higher; Oil Gains for Eighth Day

Asian stocks were mostly higher in light trading, while the dollar strengthened after its worst start to a year since 2006. Oil extended the longest winning streak of 2017.

Japan’s Topix rose as a survey showed confidence grew among manufacturers, while the yen erased an early advance sparked by the ruling party’s defeat in Tokyo elections. Stronger Chinese data failed to spur gains among Shanghai shares. The first day of China’s new bond link to the rest of the world started on Monday, with little in the way of a market reaction. Trading volumes were light before a U.S. holiday as investors awaited Friday’s report on the American jobs market.

“Stocks are showing little reaction to Japan’s election as markets wait and see whether the result will have any impact on a national political level,” said Koji Fukaya, chief executive officer at Tokyo-based FPG Securities. “The focus this week is U.S. data, whether they will support the Fed’s hawkish view.”

Central banks stole the limelight last week as a more hawkish tilt spurred some reassessment from investors on policy steps. Attention now turns to a swathe of manufacturing reports. A private gauge of China’s manufacturing exceeded estimates in June, adding to evidence that the economy is maintaining some momentum after a strong start to the year. Japan’s Tankan survey showed confidence among large manufacturers improved for a third straight quarter.

With global equities trading near a record high on bets of improving growth, stocks continue to be one of the best-performing assets this year, with emerging-market shares soaring in the first six months of 2017. History shows the dollar may be in for further pain after dropping more than 6 percent in the first half, while the euro remains the strongest major currency this year on bets a recovery is broadening.

The yen’s reaction was muted after Japan’s ruling party lost to an upstart outfit in an election for Tokyo’s assembly, presenting Prime Minister Shinzo Abe with one of his biggest tests since coming to power in late 2012. Haruhiko Kuroda shouldn’t serve another term as governor of the Bank of Japan because the central bank will need fresh ideas as it moves toward exiting years of unprecedented monetary easing, according to an adviser to the prime minister.

Here are some key upcoming events:

The New York Stock Exchange closes early on Monday, at 1 p.m. local time, ahead of the Independence Day holiday on July 4.
The Federal Reserve on Wednesday releases the minutes from its June 13-14 policy meeting, at which officials raised interest rates.
German Chancellor Angela Merkel hosts a two-day G-20 summit in Hamburg beginning Friday. President Donald Trump will attend and is expected to hold his first meeting with Russia’s Vladimir Putin on the sidelines.
American employers probably added around 175,000 workers in June and wage growth probably strengthened, consistent with a solid labor market, economists project the U.S. Labor Department to report on Friday.

Here are the main moves in markets:

Stocks

The MSCI Asia Pacific Index was little changed as of 3:38 p.m. in Tokyo. The gauge finished the second quarter with a gain of 5.2 percent.
Japan’s Topix index increased 0.2 percent. South Korea’s Kospi index increased 0.1 percent and Australia’s S&P/ASX 200 slipped 0.7 percent.
Hong Kong’s Hang Seng added 0.2 percent and the Shanghai Composite climbed less than 0.1 percent. Indonesia’s benchmark index rose 0.6 percent as the market reopened after a week-long holiday. India’s Sensex jumped 1 percent, the most since May.
Futures on the S&P 500 advanced 0.2 percent after the underlying gauge rose 0.2 percent on Friday to round out its worst week since April. The U.S. market will be closed Tuesday for the July 4 holiday.

Currencies

The yen fell 0.2 percent to 112.54 per dollar, after erasing an earlier advance of as much as 0.4 percent. The Australian dollar and South Korean won lost 0.2 percent.
The Bloomberg Dollar Spot Index rose 0.1 percent after dropping 1 percent last week and touching the lowest level since October.
The pound fell 0.2 percent to $1.3001, after an eight-day rally. The euro slipped 0.2 percent to $1.1404.

Bonds

The yield on 10-year Treasuries rose one basis point to 2.32 percent, adding to a 16-basis point surge last week, the steepest since March.
Australian benchmark yields jumped seven basis points to 2.67 percent.
French and German 10-year yields rose one basis point.

Commodities

Crude rose 0.4 percent to $46.23 a barrel. WTI has rallied 8.7 percent over eight days, after tumbling more than 20 percent from the year’s peak to enter a bear market.
Gold slipped 0.4 percent to $1,236.53 an ounce.

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Samed Olukoya

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

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

Published

2 days ago

May 16, 2024

Samed Olukoya

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

Published

2 days ago

May 16, 2024

Samed Olukoya

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

Crude Oil

Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

Published

2 days ago

May 16, 2024

Samed Olukoya

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.