A Review of the Nigerian Energy Industry

Financial market update

19 December 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria is scheduled to export 65 crude cargoes in February, a partial loading program obtained by Bloomberg showed. Daily exports in Feb are scheduled to be 2.12 million barrels. Total shipments for Jan is planned at 2.16 million barrels a day. Loading programs are monthly schedules of crude shipments complied by field operators to allow buyers and sellers to plan their supply and trading activities.

USA: The current account deficit in the US narrowed in the third quarter helped by slowing imports. The gap shrank to USD107.5bn the smallest in almost two years from USD118.1bn. Cooling demand in the world’s largest economy is limiting imports at the same time that a slowdown in growht from Europe to China reduces overseas sales, a sign that it will get harder to keep shrinking the trade deficit.

CHINA: The World Bank said growth in East Asia will accelerate next year as China’s economy recovers reducing the need for policy makers to cut rates. East Asia is expected to grow 7.5% in 2012 and 7.9% in 2013 said the WB. They however state that the region still faces risks from Europe and the US where spending cuts and tax increases are due to take effect in Jan if lawmakers don’t resolve a fiscal dispute.

INDIA: To be more competitive in the tourism sector, India’s Ministry of Tourism announced that it will examine the impact of taxation on the sector and conduct an analysis to compare with that of neighboring countries. The assessment will aim to address criticism that the export industry which benefits from an exemption from service tax has an unfair advantage over the tourism sector.

Bonds – Quiet markets, auction comes today where offshore participation would determine whether we see yields back up or fall lower. With the size being offered on the 7 & 10year it is unlikely we will see the yields lower than current levels.

Bills – The 21/03/13 bill, which is being offered as the 91day tomorrow was bought in the markets today dipping 50bps from 13.34% to 12.80% to match where expectation is for the 91 day cut off at the auction. The CBN came out on Tuesday with offerings on the 19th and 27th as the calendar has expired two weeks ago.

Money Market – OBB and unsecured O/N rates dipped to close at 10.75% and 11.00% as the market received a boost from FAAC inflows of around N230billion hit the system today.

Indicative Currency Exchange Rates
                             Bid            Offer
EURUSD           1.3248         1.3258
GBPUSD            1.6261         1.6271
USDJPY             84.29          84.69
USDCHF            0.9118        0.9138
GBPEUR            1.2274        1.2284
USDZAR            8.4473       8.5473
USDNGN           157.78        158.53
JPYNGN            1.8719         1.9219
CHFNGN           173.04        177.04
EURNGN           209.03       213.03
GBPNGN            256.57       260.57
ZARNGN            18.68         19.43

Oil closed at its highest level in almost two weeks (Brent @ 108.84, WTI @ 87.89) as an API report showed that inventories fell by 1.75 million barrels – the most in more than 3 month.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.7083      USD 1 month          0.2107
7 Day            11.2917        USD 3 month         0.3090
30 Day         12.0417        USD 4 month         0.3621
60 Day         12.4583       USD 6 month        0.5085
90 Day         13.1667        USD 12 month      0.8425
Y/Y Consumer Inflation November 2012 :    12.3%
FX Reserves: 11 December 2012 (USD bn)    44.567
MPR                                                                        12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria

                              Hi            Low           Close        Prev.Close
USD/NGN  158.35/45   157.80/90  158.20/30   157.98/08

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