- Nigeria’s Inflation Rate Cools Further
The cost of goods in Africa’s largest economy decline for the tenth consecutive month in November, according to the National Bureau of Statistics report released on Wednesday.
Consumer Price Index, which measures inflation rate declined slightly in the month from 15.91 percent year-on-year in October to 15.90 percent in November. Suggesting that pace of improvement is slowing down when the last 6 months figures are evaluated.
On a monthly basis, consumer prices increased by 0.78 percent in November, up from 0.76 percent reported in October. This is the first month on month increase in headline inflation since May 2017.
Also, the report showed increases were recorded in all glossary: Classification of Individual Consumption by Purpose (COICOP) divisions, validating lackluster improvement and weak growth, especially during Christmas period. This could jump to record high in December with the ongoing fuel scarcity and the continuous surge in food prices.
The Food Index climbed by 20.30 percent year-on-year in November, 0.01 percent points down from 20.31 percent recorded in October.
On a monthly basis, the Food sub-index rose 0.88 percent in November, up 0.03 percent from 0.85 percent recorded in October. Also, while this represents the first rise in the month on month data following five consecutive declines since May 2017, the overall food index remains very high at 20.30 percent.
Crude Oil Rises to $43.68 on Monday Despite Concerns Over Rising COVID-19 Cases
Oil Rises to $43.68 Despite Concerns Over Rising COVID-19 Cases
Oil prices rose on Monday during the London trading session to $43.68 per barrel despite growing concerns over the rising number of new COVID-19 cases.
The Brent Crude oil, against which Nigerian crude oil is measured, rose as high as $43.68 per barrel before slightly pulling back to $43.24 per barrel as at 1:25 pm Nigerian time.
Despite the rising number of COVID-19 new cases in the US and the rest of the world, Brent crude oil has been able to sustain the recent upsurge on the back of OPEC and allies 9.7 million per day production cut agreement and the reported improvement in compliance level.
However, experts have said if the number of confirmed COVID-19 cases continues to increase that demand for the commodity will decline as people and businesses would be forced to shut down operations and stay at home.
“There will be some kind of decline in demand if cases were to increase as people will stay at home,” said Howie Lee, an economist at Singapore’s OCBC Bank. “The pace of U.S. demand recovery will not be as steep as expected.”
Analysts at ING bank said in a note that the report of the Energy Information Administration due later this week will highlight the impact of the new restriction due to the second wave of COVID-19 on gasoline demand.
“We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the EIA (Energy Information Administration) report this week.”
Citigroup Sees $60 Per Barrel Crude Oil in the Next 12 Months
Citigroup Says Crude Oil Will Reach $60 Per Barrel in a year
Despite the current economic downturn and the projected second phase of COVID-19, Citigroup, a New-York based financial service company, has said oil price could hit $60 per barrel in the next 12 months.
Citigroup disclosed this on Thursday during a virtual EMEA Media Summit titled – ‘Navigating the Future: What’s Next in a Post-COVID-19 World’.
“After a substantial underperformance in the last six months relative to several other commodities, crude will eventually bounce back to around $60 per barrel over the next 12 months,” Max Layton, European Head of Commodities Strategy, Citigroup said while giving a presentation on the outlook for commodities in the second half of 2020, and into 2021.
This means Brent crude oil would rise by at least 50 percent from the current level of $42 per barrel in the next 12 months.
“It’s going to be a function of the demand and supply but recently we have been seeing a spike in the demand for some of the commodities,” said Atiq Rehman, Head of EMEA Emerging Markets, Citigroup.
“A lot of these economies are heavily commodity-dependent, and perhaps, in the past have been guilty of not diversifying when they come under pressure. I think perhaps, this recent moves will push them to diversify away from simply commodities,” Grant Carson, Head of TRUK And Non-Presence Countries, Citigroup, stated citing Russian as one of the countries that have recorded success in diversifying away from crude oil.
Oil Sustains $42 Price Level as OPEC Output Drops to Over Two-Decade Low
OPEC Oil Output Drops to Over Two-Decade Low in June
Crude oil sustained $42 per barrel price level following a recent survey conducted by Reuters that showed the Organisation for the Petroleum Exporting Countries (OPEC) managed to cut oil production to over two-decade low in the month of June.
According to the survey, OPEC’s 13 members pumped 22.62 million barrels per day in June, 1.92 million barrels per day below May’s revised figure. The lowest since May 1991.
OPEC and allies, together referred to as OPEC plus, had agreed to cut oil production by 9.7 million barrels per day in the month of April to rebalance the global oil market and prop up prices amid COVID-19 pandemic.
OPEC’s share of the 9.7 million barrels per day production cut was 6.084 million bpd but OPEC delivered 6.523 million bpd cut in the month of June despite the inconsistencies from Nigeria, Angola and Iraq.
In June, Saudi Arabia reduced production by 1.13 million barrels per day to 7.53 million bpd. While Kuwait and the United Arab Emirates met their quota but struggle to fulfill the extra cuts.
Nigeria, Iraq and Angola continue to struggle in the month of June. However, their performance improved compared to May as Nigeria attained 77 percent compliance level, up from 19 percent in May.
While Iraq and Angola achieved 70 percent and 80 percent compliance level, respectively. Nigeria and Iraq have pledged to cut more in July despite their economic challenges. Angola, however, said it would not be able to cut extra oil production until October.
Brent crude oil, against which Nigerian oil is measured, rose to $42.48 per barrel on Friday as at 2:58 pm Nigerian time.
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