Markets

Middle East Conflict and Sizzling U.S. Jobs Report Create Turbulent Start to the Week

Published

11 months ago

October 9, 2023

U.S. stock futures tumbled as the military conflict in the Middle East sent shockwaves through global markets, causing oil and Treasuries to surge.

Meanwhile, the release of a robust U.S. jobs report for September heightened concerns about inflation rates.

With holidays in Japan and South Korea thinning trading volumes, investors sought refuge in safe-haven assets, including Japanese yen and gold.

Oil prices rose by over $3 a barrel amid fears of potential supply disruptions from Iran.

Analysts at CBA explained that the risk of higher oil prices, equity market declines, and increased volatility supporting the U.S. dollar and yen while undermining “risk” currencies.

They also warned that disruptions to Iran’s oil exports could push Brent crude oil above $100 per barrel in the short term.

The escalating military conflict in the Middle East, which saw Israel retaliate against Hamas, raised concerns about oil supply disruptions and bolstered Brent crude to $87.72 a barrel while U.S. crude climbed to $86.07 per barrel. Gold prices also appreciated by 1.1% to $1,852 an ounce.

In currency markets, the yen gained ground, but the overall movements were modest. The euro eased 0.3% against the yen and 0.3% against the dollar.

The cautious sentiment benefited sovereign bonds after recent heavy selling, with 10-year Treasury futures rising significantly. Yields were indicated around 4.74%, compared to 4.81% on Friday.

Concerns grew about the impact of rising oil prices on consumers and inflationary pressures, leading to a decline in equity futures.

S&P 500 futures shed 0.8%, Nasdaq futures lost 0.7%, and European futures slipped as well.

Despite Tokyo’s closure, Nikkei futures were down 1.0%, and MSCI’s Asia-Pacific shares outside Japan remained flat.

The strong U.S. jobs report heightened expectations of prolonged high-interest rates, with an eye on upcoming data regarding September consumer prices.

Developments in the Middle East could influence the Federal Reserve’s stance, possibly hastening a policy easing next year.

Fed fund futures implied an 86% chance of rates staying on hold in November, with 75 basis points of cuts priced in for 2024.

China also returned from holiday with a flood of economic data while the Middle East conflict threatened to cast a shadow on the start of corporate earnings season, with companies like JP Morgan, Citi, and Wells Fargo reporting this week.

Goldman Sachs anticipated modest sales growth and slim margin improvement in this environment.

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Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

3 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

Published

4 days ago

September 4, 2024

Samed Olukoya

Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

4 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.