February 26, 2016/Cowry Asset Research
In the just concluded week, Nigeria’s external reserves increased week-on-week by 0.02 percent to USD27.80billion as at Wednesday, 24 February, 2016. This followed increase in international crude oil prices amid sustained decrease in crude oil production in the United States as well as on going efforts by Opec producers and Russia to place a cap on their respective crude oil exports.
U.S. crude oil production fell wow by 0.36% to 9.1 million barrels per day as at the week ended Friday,19 February, 2016. ICE Brent crude oil price rallied w-o-w by 3.51% to USD35.09 a barrel as at Thursday and by 1.38% to USD34.26 a barrel based on average prices from Monday to Thursday. Although, Opec’s reference basket price fell w-o-w by 2.57% to USD29.19 a barrel as at Thursday, prices recovered intra week to steady wow at USD28.98 a barrel on average from Monday toThursday.
However,a downside risk to Nigeria’s fiscal and foreign sectors near term outlooks remains incessant disruption of activities at downstream petroleum sector amid below budget crude oil price.
During the week, Shell Petroleum Development Company of Nigeria Limited (SPDC) declared force majeure on Forcados liftings on February 21, 2016, following a disruption in production caused by spill on the 300,000 barrels per day capacity Forcados Terminal subsea crude export pipeline. In another development, the International Monetary Fund (IMF) announced the completion of their 2016 Article IV consultation to Nigeria. The mission partly centered on assessing the economic impact of the sharp decline in oil prices and policies for addressing near-term vulnerabilities.
Staff of the Bretton Woods Institution identified such key risks to Nigeria’s economic outlook as: lower-than-budgeted oil prices, shortfalls in non-oil revenues,a further deterioration in finances of state and local governments, and are surgence insecurity concerns for which it gave fiscal, monetary and socioeconomic policy opinions.
