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A Harsh Lesson

Stock markets have stabilized a little after Tuesday’s rout which saw risk assets pummelled across the board.



capital market - Investors King

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets have stabilized a little after Tuesday’s rout which saw risk assets pummelled across the board.

There appears to have been a tendency in recent months to front-run certain releases in the hope that it’s going to prove to be the “pivot” moment when everything starts to look up, central banks can ease off the brake and risk assets will have bottomed. That certainly looks to have been the case over the last week as investors were lured into a false sense of security following the July CPI release only to be brought back down to earth with a bang with the August report.

Unfortunately, 2022 has delivered some harsh truths when it comes to inflation and yesterday was the latest in that series. The run-up to the peak was far more aggressive and severe than anyone anticipated and, it would appear, the move back towards 2% is not going to be easy either.

Markets are now fully pricing in at least a 75 basis point rate hike next week and almost a 40% chance of it being 100, a far cry from the 50 investors were hoping to see following that CPI data. Not only that, the policy rate is expected to peak at 4.25-4.5% early next year and if the data doesn’t improve soon, that will increase further. Despite the economy’s resilience to this point, a recession may still be on the cards as the tightening cycle potentially pushes it over the edge.

BoE seen hiking by 75bps even as inflation eases

UK inflation is back into single digits, with the headline rate falling back to 9.9% last month. That’s not exactly cause for celebration, nor is it likely the peak, but you have to take your wins where you can these days. And as we’ve already learned once this week, nasty inflation surprises are not yet a thing of the past, with the UK looking more susceptible to them than most.

The data also won’t in all likelihood change the outcome of the BoE meeting next week, with 75 basis points now heavily backed but 50 also possible. The UK still has a major inflation problem and the central bank has a lot of catching up to do after dragging its feet for much of the year so far.

A lot of talk and a little bit of action

The FX intervention warnings are coming thick and fast since the release of the US CPI data on Tuesday, which saw the dollar surge and come within a whisker of 145 to the yen. The move reportedly prompted the BoJ to conduct a rate check overnight, widely seen as a precursor to intervening in the markets for the first time since 1998. Since then, the USDJPY pair has fallen well back towards 143 and we’ve been flooded with warnings of urgency and willingness to act. The line in the sand has been drawn and speculators may now feel that 145 is viewed in Japan as a step too far. With the Fed and BoJ meeting in the middle of next week – among many others – it promises to be a fascinating seven days.

PBOC desperately trying to support the yuan

It’s not just Japan that’s fretting about the weakness of its currency, the PBOC set the yuan fix at its strongest bias on record versus expectations. The move is the latest in a series of attempts to stabilise the currency against fierce headwinds while at the same time attempting to ease financial conditions at home. The road ahead is full of potholes for the world’s second-largest economy and confidence is continuing to deteriorate.

A still uncertain outlook for oil demand

Oil prices suffered alongside risk assets on Tuesday, albeit to a much lesser extent, with the threat to the US economy of much higher interest rates a downside risk. Of course, it’s yet another risk that I’m sure OPEC+ will be keen to stress it would adapt to in its desperation to ease market volatility and keep prices high.

The oil price is a little higher after the IEA monthly report which claimed oil use for power generation will hit 700,000 barrels per day, while at the same time indicating that demand growth will halt in the fourth quarter before rising by 2.1 million barrels per day next year. It, therefore, lowered its forecast for world oil demand growth this year by 110,000 BPD to two million while warning of downside risks including the faltering Chinese economy and a slowdown in OECD countries. Ultimately, the outlook is heavily subject to revisions given the still rapidly evolving environment.

A nervy week ahead

It won’t come as a surprise to anyone that gold went into freefall following the US inflation report as it became clear that the Fed is in no position yet to ease its foot off the brake. Suddenly the yellow metal is looking down rather than up, with $1,730 remaining strong resistance to the upside but $1,680 now very vulnerable. It’s going to be a nervy week for gold bulls.

Will the Ethereum Merge support crypto prices?

Bitcoin was probably at the top of the list of instruments that got carried away at the prospect of fewer rate hikes ahead of the CPI data and it, therefore, got hit the hardest when the number dropped. Of course, there are other things happening in the crypto space right now with a huge focus on the imminent Ethereum Merge, with some suggesting that may have contributed to the rebound we’ve seen. Of course, that could equally compound the sell-off if it becomes a “buy the rumour, sell the fact” event. Time will tell.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

Crude Oil

Oil Prices Surge as China’s Holiday Demand and Tight US Supply Drive 2% Weekly Gain



Crude oil - Investors King

Oil prices to close the week with about a 2% gain as robust holiday demand from China and constrained U.S. fundamentals overshadowed concerns about potential supply increases from Saudi Arabia.

Brent crude oil, against which Nigerian oil is priced, gained 5 cents to $95.43 per barrel at about 6:00 a.m. Nigerian time on Friday while the U.S. West Texas Intermediate crude (WTI) rose by 16 cents to $91.87 per barrel.

The market’s resilience became evident as it rebounded from a slight 1% dip in the previous session when profit-taking followed a surge in prices to 10-month highs.

China, the world’s largest oil importer, played a pivotal role in driving prices higher. Strong fuel demand coincided with China’s week-long Golden Week holiday, with increased international and domestic travel significantly boosting Chinese oil consumption.

Analysts at ANZ noted that this holiday season’s surge in travel was underpinned by the fact that the average daily flights booked were a fifth higher than during Golden Week in 2019, pre-dating the COVID-19 pandemic.

Also, improving macroeconomic data from China and the steady growth of its factory activity further supported the bullish sentiment.

The U.S. economy’s robust growth and indications of accelerated activity in the current quarter also bolstered expectations of sustained fuel demand.

Also, tight supplies in the U.S., evidenced by dwindling storage levels at Cushing, Oklahoma, provided additional support to oil prices. As rig counts fell, U.S. oil production was expected to slow down, potentially pushing the market into a deficit of more than 2 million barrels per day in the last quarter.

Investors are now eagerly awaiting the upcoming meeting of the Organization of the Petroleum Exporting Countries and allies (OPEC+), scheduled for October 4th.

The meeting will be a crucial indicator of whether Saudi Arabia will consider stepping up its supply in response to the nearly 30% surge in oil prices this quarter.

Analysts, however, caution that the market may be entering overbought territory, leading to possible hesitancy among participants and concerns that OPEC+ could ease production cuts earlier than planned if prices continue to rise.

The outcome of next week’s OPEC meeting will undoubtedly hold significant implications for the oil market’s future trajectory.

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Crude Oil

Oil Prices Soar to a Year High as Crude Reserves Plummet

Crude stocks at a pivotal storage hub in Cushing, Oklahoma, hit their lowest levels since July last year, sparking concerns about future supply stability.



Crude oil

Oil prices surged to their highest level in over a year during Asian trading hours, following a significant drop in crude stocks at a key storage hub.

Crude inventories in Cushing, Oklahoma, plummeted to a mere 22 million barrels in the fourth week of September, close to operational minimums, according to data from the U.S. Energy Information Administration (EIA).

This translates to 943,000 barrels compared to the prior week.

The U.S. West Texas Intermediate (WTI) rose to $95.03 per barrel during Asian trading hours, a peak not seen since August 2022 before settling at $94.61 per barrel.

Meanwhile, Brent crude oil, the international benchmark for Nigerian oil, rose by 1.05% to $97.56 per barrel.

Experts have attributed this rapid price escalation to the precarious situation in Cushing, with Bart Melek, Managing Director of TD Securities, stating, “Today’s price action seems to be Cushing driven, as it reaches a 22 million bbl low, the lowest level since July 2022.”

Melek expressed concerns about the challenges of getting crude oil into the market if inventories continue to dip below these critical levels.

Predicting the future trajectory of oil prices, Melek suggested that prices could remain at elevated levels for the remainder of the year, especially if the global oil cartel, OPEC+, continues to enforce supply restrictions.

He noted that the global oil market is facing a “pretty robust deficit” on top of an already significant shortfall for this quarter due to OPEC’s production cuts.

Saudi Arabia, a key player in OPEC+, has extended its voluntary crude oil production cut of 1 million barrels per day until the year’s end, bringing its crude output to nearly 9 million barrels per day.

Russia has also pledged to continue its 300,000 barrels per day export reduction until December.

However, Melek added that, “We do think that prices could keep up near these levels for quite some time. But I don’t think it’s too permanent. And we might have seen the end of this rally.”

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Nigeria’s Struggles in the Energy Sector Highlighted as Ghana Nears Universal Access



Power - Investors King

Nigeria, the most populous nation in Africa, continues to grapple with challenges in its electricity sector, resulting in a significant lag behind its West African neighbor, Ghana, in achieving universal access to electricity.

Ghana, with its population of 34 million, has made remarkable strides in expanding its power sector, attaining an impressive electrification rate of 88.54% with ambitions to reach 100% by 2024.

Ghana’s success story is characterized by its deliberate policy formulation and swift implementation to bolster its power sector, facilitating increased investment and widespread electricity access for its citizens.

Speaking at the Nigeria Energy Conference and Exhibition 2023 in Lagos, Ghana’s Minister of Energy, Andrew Mercer, underscored his country’s commitment to achieving universal access to electricity by the end of 2024.

Mercer stated, “The president of Ghana emphasized the aggressive target of the government to achieve universal access by the end of 2024 from the current rate of 88.54%. This is consistent with the UN Sustainable Development Goal 7 (SDG7), which aims to ensure access to affordable, reliable, and modern energy for all by 2030.”

In Ghana, the total installed energy capacity stands at 5,454 megawatts (MW) with dependable capacity at 4,843 MW, and peak demand reached 3,561 MW in May 2023.

Meanwhile, Nigeria boasts a significantly higher total installed generation capacity of 13,000 MW but only a fraction, between 3,500 and 4,500 MW, is effectively transmitted and distributed to Nigerian homes and businesses.

Tragically, this disparity means that over 80% of Nigerians still lack access to the electricity grid with only around 11.27 million Nigerians recorded as electricity customers as of Q1 2023, according to the National Bureau of Statistics (NBS).

Ghana’s sustained electricity grid stability has resulted from consistent efforts by the government and stakeholders to enhance the nation’s electricity industry, ultimately improving the quality of life for Ghanaians and supporting economic activities.

Both Ghana and Nigeria have increased their reliance on thermal power generation, reducing the share of hydro power generation in favor of thermal sources. However, while Ghana boasts a record of grid stability and minimal outages, Nigeria has struggled with frequent grid collapses.

In September 2023, Nigeria experienced grid collapses on two occasions, disrupting power supply nationwide.

This disparity in grid reliability highlights the challenges faced by Nigeria’s electricity sector. According to data from the Nigerian Electricity Regulatory Commission (NERC), Nigeria recorded a high number of grid collapses in recent years, with 2018, 2019, 2020, and 2021 witnessing 13, 11, 4, and 4 collapses, respectively.

In 2022, there were seven recorded grid collapses, with the most recent occurring on September 25, 2022, when power generation plummeted from over 3,700 MW to as low as 38 MW.

As Nigeria grapples with these electricity challenges, Ghana’s steady progress in its power sector serves as a reminder of the critical importance of comprehensive policies, infrastructure development, and stability in ensuring universal access to electricity for citizens, a goal that remains elusive for millions of Nigerians.

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