Culled—Proshare
November 17, 2017/FDC
Even though, the naira strengthened in October to N363/$, surprisingly imported food inflation jump by 0.51% to 15.34%. The only reason why the food basket actually declined marginally was as a result of the bumper harvest this year.
In the last four days, Brent oil price has declined by 3.6% to $61.53pb after reaching a two-year high last week. Sell pressures are being underpinned by an unexpected jump in U.S shale output. The market is looking out for signals from OPEC ahead of the cartel’s bi-annual meeting on November 30.
The attached slides sum up the events that took place in the domestic and global commodity markets this week.
Burning Economic Issues
- Inflation eases for the ninth consecutive month to 15.91%
- Cumulative decline of 2.8% in 10 months
- Senate approves FGN external borrowing programme ($5.5bn)
- Brent slides by 0.39% to $61.48pb, cumulative decline in November of 3.6%
- On-grid power stays above 4,000MW
- Naira trades flat at N363/$
Economic News
The Good News
- Improved gas supply is boosting on-grid power output – 4,000MW
- Diesel price flat at N200/litre
- Inflation slide may force accommodative stance (MPC)
The Bad News
- Oil markets face renewed turmoil, could slide below $60pb
Power Generation analysis & Impact
November 13th: Average power output sent was 4,019MWh/hour (up 256.93MWh/h)
- Gas constraint was 1,436MW; frequency management constraint due to loss of DisCo feeders was 405.7MW, water management constraint was 150MW
- Estimated loss: N0.98bn (annualised at N360.98bn /$1bn)
- Shiroro Hydro has commenced water management measures to ensure dry season Efficiency
Stock Market
· Consumer goods sub index down 0.79% to 884.91 pts
• On an unexpected jump in U.S shale output
• Concerns of global demand also weighed on prices
Oil markets today
• Prices likely to remain above $60pb in the near term
• On-going tensions in the Middle East will continue to support market.
• However, resurgence in U.S output will cap gains.
Outlook – Agric Prices
Grains