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Wall Street Set for a Steady Open, COVID Treatments Purchases Boost Sentiment

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COVID-19 Vaccine - Investors King

By Edward Moya

US stocks were headed for a flat open, following efforts from the US and UK to secure COVID treatments. Trading volumes will continue to fall heading into the holiday weekend, but risk appetite will struggle to deliver a significant stock market rally as the Omicron variant still poses a major risk for many healthcare systems. 

US Treasury yields inched higher with the yield curve most likely waiting until the New Year before steepening.

COVID

The next battle in the war against COVID has both the US and UK rushing to secure supplies in COVID treatments.  The Biden administration is expected to acquire 4 million courses of COVID-19 treatments by the end of January, while the UK secured 1.75 million courses of Merck’s COVID pill and 2.5 million courses of Pfizer’s COVID treatment.  Omicron has shown that unvaccinated individuals are still a significant portion of the population amongst heavily vaccinated countries and that hospital capacity is rapidly disappearing.  Germany is concerned over the current surge could eventually test their healthcare capacity.

In the US, a return to lockdowns seen earlier in the pandemic are unlikely, but the US consumer will be weaker as many Americans won’t have the same benefits if their jobs have tentative closures.

Madrid is battling a record number of daily COVID infections and could face similar restrictions announced earlier in the week in Catalonia.  China’s Xi’an reported 52 Covid cases and that will likely lead to further restrictive measures.

The annual Consumer Electronic Show (CES) in Las Vegas is still going to happen, but many key players are pulling out.  The heavily anticipated event that unveils the latest innovation in tech will not see Amazon, Facebook, Twitter, and Pinterest. Earlier in the week, the World Economic Forum postponed the Davos meeting.

The world wants to return to normal, but a return to convention centers and annual showcases will have to wait until after the Christmas surge is over in late January.

US Data

The final reading of third quarter GDP saw upside revisions across the board, with the headline revised higher from 2.1% to 2.3%.  Personal consumption improved from the preliminary 1.7% reading to 2.0%, while pricing readings edged higher.  This data was old but did confirm the narrative of growth remaining strong and pricing pressures still are approaching their peak.

The Chicago Fed National Activity index declined more than expected as production and employment indicators decelerated.

Czech

The Czech Central Bank (CNB) is aggressively tackling inflation after surprising FX traders with another larger-than-expected rate hike.  The benchmark rate rose 100 basis points to 3.75%, 25 basis points more than the consensus estimate.  The Czech koruna rallied against the dollar and little changed against the euro.

Oil

Crude prices are little changed as traders refuse to put on any major positions as too much uncertainty persists with the short-term crude demand outlook and while trading volumes continue to fall leading up to the holidays.  A force majeure from a key Nigerian export terminal and a weaker dollar have provided some support for oil prices.

The omicron variant could still lead to more restrictive measures across Europe and Asia, but prices won’t break since OPEC+ can easily adjust their production levels.  Oil prices seem like they could go much higher in the New Year once the demand outlook is beyond the current omicron wave.

Gold

Gold prices edged higher as Wall Street remains fixated over the growing list of short-term risks.  Omicron remains the focus for most traders and that should support gold prices to remain close to the $1800 level.  The dollar should start to trade relatively flat into year end as quantitative tightening by the Fed has mostly been priced in.

Gold dipped after a better-than-expected final reading of third quarter GDP, that showed slightly more inflation and economic growth.

Cryptos

Bitcoin and Ethereum have both entered holiday mode and continue to consolidate around key technical levels.  The headlines have not been inspiring to suggest a breakout could be imminent.  Ethereum’s micro futures contracts on the CME are off to a lackluster start.  Despite Ether being all the buzz for the next wave of crypto investors, the uptick with micro ether futures is disappointing as only 115,000 contracts traded in the two weeks to December 17th.

Bitcoin continues to face a wall at the $50,000 level and until that level is breached, speculators may remain on the sidelines.

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Crude Oil

Nigerian Army Seizes 700,000 Liters of Stolen Petroleum in Sweeping Raid Across Four States

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In a series of raids across Rivers, Bayelsa, Akwa Ibom, and Delta states, troops from the 6th Division of the Nigerian Army seized 700,000 liters of stolen petroleum products, sealed 29 illegal refining sites, and arrested 24 suspected oil thieves.

In a statement issued by the Division’s Public Relations Officer, Lt. Col. Danjuma Jonah, it was noted that 14 boats involved in crude oil theft were also destroyed during the operation.

Jonah disclosed that the raids were conducted between October 28 and November 3, 2024.

He revealed that the troops intercepted a large wooden boat carrying over 150,000 liters of stolen crude oil in the Kula area of Akuku-Toru Local Government Area of Rivers State.

Providing a breakdown of the operation, Jonah stated, “Another boat carrying 50,000 liters of crude oil was seized, while three illegal refining sites were dismantled, and cooking pots containing 20,000 liters of stolen diesel were confiscated. Troops also dismantled ten illegal refining sites in Kay and Abesa in Akuku-Toru LGA, seizing 400,000 liters of illegally refined diesel.”

In Bayelsa State, soldiers deactivated two illegal refining sites at Boma Creek in Southern Ijaw LGA, recovering storage tanks holding over 2,500 liters of stolen crude. Similarly, operations in Obughene Creek in Southern Ijaw yielded over 4,500 liters of stolen crude, while another 3,000 liters of illicit product were seized at West Boma Creek.

In Akwa Ibom State, troops intercepted two Toyota Camrys loaded with illegally refined diesel, concealed in nylon bags, totaling 3,000 liters. The vehicles were stopped along the Ikot Abasi-Abak road, and the drivers were detained.

In Delta State, multiple raids were conducted, including the interception of a tricycle in Kwale, Ndokwa West LGA, carrying stolen iron pipes allegedly taken from decommissioned Oando pipelines.

Another raid in Patani town uncovered a storage dump containing 40 jerricans of stolen products, while troops patrolling Uro Community waterways intercepted a wooden boat with 200 sacks of premium motor spirit,” he concluded.

The statement added that suspects arrested during the raids have been handed over to relevant authorities for prosecution.

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Crude Oil

OPEC+ Supply, Trump-Harris Election Face Off Lend Support to Oil Prices

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Crude oil

The decision of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to delay plans to increase output for another month and the close call of the presidential elections in the United States triggered a 2 percent rise in oil prices.

Brent futures were up $1.98, or 2.7 percent at $75.08 a barrel while the US West Texas Intermediate (WTI) crude rose $1.98, or 2.85 percent to $71.47.

OPEC+ said it would extend its output cut of 2.2 million barrels per day for another month in December at a meeting on Sunday.

Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates (UAE) agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024.

The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.

Also speaking on Monday, OPEC’s Secretary General, Mr Haitham Al Ghais said on Monday that OPEC remains very positive on demand for oil in both the short and long term.

The market has also shifted focus to the American presidential election between Democratic presidential nominee and current Vice President, Kamala Harris and Republican Donald Trump on Tuesday (November 5).

So far, the outcome has shown that the election is tight as it could take days after voting ends to know the eventual winner.

The market will also be looking at the developments in the Middle East, especially with anticipation that Iran was preparing to attack Israel from Iraq within days.

Markets were also watching a new tropical storm that was forecast to form on Monday in the Caribbean and threaten offshore oil production along the Gulf of Mexico.

Oil companies like Shell have moved its non-essential personnel from six platforms, adding it currently expects no other impacts on its production across the Gulf of Mexico.

There will be anticipation of what the US Federal Reserve will do at the next meeting on Thursday with expectations high that the US central bank will cut interest rates by 25 basis points.

Also, investors will be looking to China where the government is expected to approve additional stimulus to boost the slowing economy in the world’s largest oil importer.

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Agric Industries Take Interest In Unlocking Nigeria’s $10bn Palm Oil Export Potential

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palm oil

Some agric-focused industries and firms have indicated interest in enhancing Nigeria’s agricultural productivity and competitiveness through the nation’s $10 billion palm oil export potential.

At the launch of a new report by a research and advisory firm, Vestance, significant untapped opportunities within Nigeria’s oil palm sector were revealed.

Discussing how the nation could regain its lost glory in palm oil production and exportation, stakeholders in the sector emphasised the need for government agencies, private sector investors, smallholder farmers, research institutions, and development partners to work together to help change the narratives in the palm oil sector.

Titled “Reclaiming Lost Glory: Nigeria’s Palm Oil Renaissance,” the report, which was unveiled in Lagos disclosed that Nigeria, despite being a major producer historically, currently exports only $1.34 million in palm oil, ranking 78th globally, while importing $372 million annually

Vestance’s Research Lead, Razaq Fatai, said the report illustrates the immense opportunities lying dormant in the country’s underutilised oil palm plantations, noting that by capitalising and rejuvenating these plantations, Nigeria could generate over $10 billion in export revenue alone.

He explained that Nigeria’s palm oil production began to decline during the country’s civil war between 1967 and 1970, saying, it is now time to begin to reverse the decline and put the sector back on track.

Speaking at a panel session on ways to revitalise the oil palm sector, experts proffered means by which challenges confronting the palm oil sector could be tackled.

In his submission, the Managing Director, SWAgCo (O’dua Investment Group), Dr. Adewale Onadeko, said Nigeria should embrace an agro-industrial cluster strategy, adding that essential infrastructure such as seeds, fertilisers, extension services, processing, and storage facilities should be prioritised if the expected gains could be realised.

Another panellist, Dr. Bayo Ogunniyi, Country Programme Analyst for International Fund for Agricultural Development, highlighted the myriad challenges facing smallholder farmers, particularly the lack of access to finance and the prevalence of old, low-yield seeds.

He underscored the urgent need for Nigeria to distribute high-quality seeds to smallholder farmers to enhance production levels.

Ogunniyi also pointed out that the oil extraction rates of smallholder palm oil processors are alarmingly low, often falling below 15 percent, compared to the 25 percent extraction rates achieved by modern processing mills. Improving these extraction rates is crucial for maximising the output from Nigeria’s palm oil sector.

In his own contribution, CEO of BulkDirect, Ramses Najem, emphasised the importance of situating processing facilities closer to the farms to reduce transportation challenges.

Other speakers at the report launch called for a nationwide adoption of high-yield seeds to boost production, investment in modern processing facilities to increase oil extraction rates, and the development of strategic transportation networks to streamline the supply chain.

 

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