Culled—Proshare

February 23, 2017/FDC

Tweaking the forex policy and increasing supply helped the naira recover 5% of its value in 2 days to N495/$. Before we get carried away, we must remember that this recovery is only as good as the supply remaining consistent.

The good news is that oil is currently trading at $57pb. If sustained, this will provide the buffer needed to support the CBN’s policy directive of substantial weekly dollar injections into the market.

Burning economic issues

• Dollar supply increased by $371mn
• Parallel market appreciated by 5% to N495/$
• Naira drought as interest rate spikes to 120% p.a. and then crashes to 30% p.a.
• FAAC allocation up 16% to N465bn
• Diesel – N260/l, PMS flat at N145/l
• Power from the grid improves to 4,302MW

The Good:

• Oil revenue up as price remains above $56pb
• OPEC optimistic about sustained price level

Consumer goods – current price Lagos

Stock market

• NSE ASI 0.01% (25,249.74) pts
• NB FY’16 – Revenue up by 6.75%, PBT down by 27% to N40bn
• Net loss from foreign exchange translations rose by 231% to N7bn

Oil prices

• Brent crude by 1.21% to $56.32pb
• Oil prices rose on expectations of OPEC cut extensions
• Gains were capped by the stronger US dollar and rising inventory levels
• Inventory level is projected to increase by 3.23 million barrels

Oil markets today

Outlook – oil prices

• Crude oil inventory data will drive the market for the rest of the week
• Investors remain doubtful about
• 100% compliance to output curb in the coming months
• Reduction in US crude supplies
• The lead up to the possibility of an output deal extension will continue to sustain the rally in oil prices

Outlook – agric prices

Grains

Prices will remain suppressed as production exceeds demand

Softs

SUGAR

Short term picture will be clouded by India’s ever decreasing production estimate

COCOA

Prices to trade lower on rising supplies from Ivory Coast