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Oil Trades Near $49 Before OPEC Talks on Output Cut Compliance

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Oil Prices - Investors King
  • Oil Trades Near $49 Before OPEC Talks on Output Cut Compliance

Oil traded near $49 a barrel before representatives of OPEC nations meet with their allies to discuss why some of them are falling behind in pledges to reduce production.

Futures fell 0.3 percent in New York after climbing 1.1 percent Friday. The two-day meeting in Abu Dhabi starting Monday and co-chaired by Kuwait and Russia will examine why some participants in the deal to collectively reduce global supply aren’t fully implementing their cuts. The number of U.S. drill rigs targeting crude fell by one last week, according to Baker Hughes Inc.

Oil in New York was unable to hold its first advance above $50 a barrel since May as signs of rising global supply eroded optimism that output curbs by the Organization of Petroleum Exporting Countries and its partners are rebalancing the market. Compliance to cuts fell to 86 percent in July, the lowest level since January, according to a Bloomberg survey.

“The big players are going to remain compliant, or at least say they are,” said Ric Spooner, an analyst at CMC Markets in Sydney. “Markets continue to assess the overall demand, supply and inventory situation as it unfolds. The likely range for oil at the moment is the mid-$40s to the low $50s.”

West Texas Intermediate for September delivery was at $49.41 a barrel on the New York Mercantile Exchange, down 17 cents, at 2 p.m. in Hong Kong. Total volume traded was about 10 percent below the 100-day average. Prices added 55 cents to $49.58 on Friday, trimming the weekly loss to 0.3 percent.

Brent for October settlement dropped 18 cents to $52.24 a barrel on the London-based ICE Futures Europe exchange. Prices rose 41 cents to $52.42 on Friday, reducing the weekly decline to 0.2 percent. The global benchmark crude traded at a premium of $2.68 to October WTI.

Saudi Arabia said last month that it planned to increase pressure on nations that didn’t comply with their pledged cuts. Compliance by members from OPEC slid to 78 percent in June, compared with 82 percent from its 10 non-OPEC partners, according to the International Energy Agency.

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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Naira

Naira Exchange Rates Today, Thursday, July 29, 2021

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Naira to Dollar Exchange- Investors King Rate - Investors King

Naira continues its decline across the board as forex scarcity persists following the Central Bank of Nigeria’s decision to cut off the bureau de change forex section.

The Naira exchanged against the United States Dollar at N520 on Thursday at the black market. Against the British Pound and the Euro, the local currency exchanged at N715 and N600, respectively.

The Central Bank of Nigeria had accused Bureau de Change operators of engaging in money laundering and illicit flows with criminal-minded individuals that operate mainly at the unregulated black market section of forex.

Operators at the bureau de change section of forex had been accused of being the main source of forex for speculators and hoarders that manipulate forex rates at the unregulated black market, this the CBN plans to curb by cutting its weekly forex supply to BDCs but focus on servicing the economy through the banks.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
29/07/2021 512/520 705/715 590/600 70/75 410/420 300/325
28/07/2021 515/525 700/710 590/600 63/70 410/420 300/320
27/07/2021 500/505 695/703 585/592 62/69 407/415 300/320
26/07/2021 500/504 695/703 585/592 62/69 407/415 300/320
23/07/2021 500/504 698/705 588/595 62/69 407/415 300/320
22/07/2021 498/503 695/703 585/590 62/69 407/415 300/320
19/07/2021 495/503 698/705 585/592 62/69 407/415 300/320
16/07/2021 502/506 700/708 590/596 62/69 407/415 300/315
15/07/2021 500/505 700/708 590/596 62/69 407/415 300/320
14/07/2021 500/505 702/708 590/595 62/68 407/415 300/320
13/07/2021 500/505 702/708 590/595 62/68 407/415 300/320
12/07/2021 500/505 700/708 590/595 62/69 407/415 300/320
09/07/2021 500/505 700/708 588/593 62/69 407/417 300/320
08/07/2021 499/503 700/708 588/593 62/69 407/417 300/325
07/07/2021 499/503 700/710 588/593 62/69 407/417 300/325
06/07/2021 499/503 698/710 590/595 62/69 407/417 300/325

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
29/07/2021 510/525 705/715 590/602
28/07/2021 510/520 695/706 585/600
27/07/2021 490/500 690/700 580/595
26/07/2021 490/500 694/705 580/595
23/07/2021 490/500 694/705 580/595
22/07/2021 490/500 690/705 580/595
19/07/2021 490/500 690/707 580/595
16/07/2021 490/500 700/710 585/600
15/07/2021 490/500 698/710 585/600
14/07/2021 490/500 698/710 590/595
13/07/2021 490/500 697/710 585/600
12/07/2021 490/500 698/710 585/600
09/07/2021 490/500 698/710 585/600
08/07/2021 490/500 697/710 585/600
07/07/2021 490/500 697/710 585/600
06/07/2021 490/500 697/710 585/600
05/07/2021 490/500 700/714 585/600

Central Bank of Nigeria’s Official Naira Rates

Date Currency Buying(NGN) Central(NGN) Selling(NGN)
7/28/2021 US DOLLAR 409.16 409.66 410.16
7/28/2021 POUNDS STERLING 567.8322 568.5261 569.22
7/28/2021 EURO 483.0543 483.6446 484.2349
7/28/2021 SWISS FRANC 446.8276 447.3736 447.9196
7/28/2021 YEN 3.7163 3.7208 3.7253
7/28/2021 CFA 0.7176 0.7276 0.7376
7/28/2021 WAUA 580.7934 581.5032 582.2129
7/28/2021 YUAN/RENMINBI 62.9303 63.0077 63.085
7/28/2021 RIYAL 109.0919 109.2252 109.3585
7/28/2021 SOUTH AFRICAN RAND 27.6161 27.6498 27.6836

N.B: These tables are updated three times a day.

 

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Forex

CBN Orders Deposit Money Banks To Sell FX To Customers

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Forex Weekly Outlook October 17-21

The Central Bank of Nigeria, CBN, has ordered Deposit Money Banks, DMBs to sell foreign exchange (FX) to customers.

CBN disclosed this in a letter to all banks reminding them to set up teller points at designated branches across the country to fulfill legitimate FX requests by customers.

The regulator, on Tuesday, has announced the discontinuity of forex supplies to the Bureau de Change Operators, BDCs in the country over their continuous abuse of the privilege.

The letter, signed by Haruna Mustafa Director, Banking Supervision Department, stated: “Further to the Monetary Policy Committee (MPC. briefing of July 27, 2021, al Deposit Money Banks (DMBs are hereby reminded to set up teller pots at designated branches across the country to fulfil legitimate FX requests for Personal Travel Allowance (PTA Business Travel Allowance (BTA, tuition fees, medical payments SMEs transactions amongst others.

“In this regard, DMBs are also required to adequately publicize the locations of the designated branches and make necessary arrangements to sell FX to customers in cash and/or electronically in compliance with extant regulations.

“DMBs are strongly advised to ensure that no customer is turned back or refused FX provided that documentation and all other requirements are satisfied. Equally undue delays, rationing and/or diversion of FX is strongly discouraged whilst DMBs are required to establish electronic application and alert systems to update customers on the status of their FX requests.

“As communicated during the briefing, a toll-free line has been set up at the CBN for bank customers to escalate unresolved complaints related to their FX requests.

“The CBN will continue to closely monitor banks’ conduct and compliance with this directive in order to ensure an efficient FX market for all legitimate users.

“Please note that any breach of the directive will be severely sanctioned.”

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Forex

Economists Urged CBN To Reappraise Forex Policy And Eliminate Arbitrage

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Forex Nigeria

The decision of the Central Bank of Nigeria (CBN) to suspend dollar sales to the Bureau de change operators has “disrupted one of the juiciest gravy trains in the Nigerian economic racket,” according to the a renowed economist, Bismack Rewane and his team.

In its economic note, Rewane and his team at the Financial Deravatives Company believed that though BDCs are licensed by the CBN, the point had been reached where the program was no longer tenable and surely not sustainable.

“A country whose total exports and receipts were approximately $59.8bn, was spending $5bn to subsidize supposed Nigerian tourists during a covid year.

“In other words, spending more on tourism rather than debt servicing. Therefore, the structure of the forex market needed sanitization,” the team of economists led by Rewane at the FDC said in the note.

The team, however, disagreed with the CBN on its decision to divert dollar meant for the BDCs to banks, saying such an amount to “handing over the yam barns to goats to secure.”

They said such interim solution of substituting BDCs with banks is hardly going to achieve much.

“The question that arises is what is the optimal solution? Administrative controls or market pricing? The interim solution of substituting BDCs with banks is hardly going to achieve much.

“You are virtually handing over the yam barns to goats to secure. In the end, there will be no yams nor goats.

“One of the options is to simultaneously allow banks to retail dollars as they have done in the past and make BDCs engage in retailing same but at a buy rate different from today’s subsidized rate, i.e buy dollars from the CBN at the parallel market rate less a N10 premium.

“For example, if the parallel market rate is N500/$, the purchase rate from the CBN will be N490/$. If the BDCs sell at N550/$, the CBN increases its rate for BDCs to N540/$.

“That will be the same retail rate at the banks. This eliminates the arbitrage corridor and abuse. It will certainly reduce the demand for dollars and it must coincide with an increase in dollar supply from the CBN.

“This way, the naira will appreciate towards the ever-elusive fair value or the REER (Real Effective Exchange Rate), which today is anywhere between N470 and N490/$,” FDC team stated.

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