Culled—Proshare
September 27, 2017/FDC
The MPC concluded its fifth meeting of the year and in line with market expectations maintained status quo on all key rates for the 7th consecutive time.
In the global markets, oil prices climbed sharply to a 2-year high of $59pb due to threats by Turkey to disrupt oil flows from Iraq’s Kurdistan region. This development came as a result of the referendum by Kurdistan seeking independence from Iraq.
Burning Economic Issues
· MPC concludes 2-day meeting, status quo maintained
· Gencos owe banks N356bn ($988.8m)
· NAFEX window records $1.3bn transactions in one week
· Oil price up 0.03% to $59pb
· Diesel retail price sharply higher at 2.7% to N190/ltr
· Naira gains in the parallel market (N366/$) and NAFEX window (N360.31/$)
Economic News
The Good
· Oil price is up to a 2-year high at $59pb
· Increased investor confidence in NAFEX window is exchange rate positive
· No action on Nigeria’s oil output cap till January 2018
· Palm Oil (25L) price down 11.1% to N12,000
The Bad
· Diesel price up again
· Power generation companies in debt
Power Generation analysis & Impact
September 21st : Average power output was 3417MWh/hour (down 50MWh/h)
· Gas constraint was 747.5MW; frequency management constraint due to loss of DisCo feeders was 2144MW
· Estimated loss: N1.39bn (annualised at N506.62bn /$1.26bn)
· High frequency constraints impeding generation output
· Alaoji and Egbin ST 6 are now functional
Domestic Commodity Prices Movement
Stock Market
· NSE ASI 0.37% to 35,358.73pts
· Consumer goods sub index 0.81% to 931.76pts
Oil prices
· Brent crude 0.03% to $59pb
· No decision made at oil producers’ meeting in Vienna
· Oil producers wait until January 2018
· US oil production expected to increase by 1mbpd next year- EIA
Oil markets today
Outlook – Oil Prices
· Market in wait and see mode
· Increasing US oil production will continue to remain a limiting factor to oil price gains
Outlook – Agric Prices
Grains
· Larger-than-expected global supplies to drag down prices
Soft
Sugar
· Favourable weather conditions will push down prices
Cocoa
· Prices to remain soft as harvest season begins early October