A Review of the Nigerian Energy Industry

Financial market update

Financial markets14 June 2013, Sweetcrude, Lagos – Local and international financial markets products and services update.
NIGERIA: Nigeria’s All-Share Index dropped the most in more than three years on speculation that foreign investors exited the world’s fifth best rally this year on concerns that global stimulus measures may ease. The index of Africa’s biggest oil producer and largest stock market after South Africa retreated 3.9 percent to 37,406.67 at the close, its biggest decline since March 2010.

Nigeria’s Crude Oil Output Declined to a Six month low of 1.96 million barrels per day, mbd, according to the International Energy Agency, IEA. This means that the country is already losing about 600,000 barrels of its daily production benchmark of 2.567mbd in the 2013 budget. The agency attributed the decline to oil theft and pipeline vandalism which had bedevilled the industry for a long time.

EUROPE: Electricity in the U.K. is poised to cost almost twice as much as in Germany within two years as Britain lags behind in building solar and wind plants. U.K. power will be 85 percent more expensive than in Europe’s biggest energy market in May 2015, according to data compiled by Bloomberg. That compares with an average premium of 17 percent over the past five years and 80 percent yesterday, data from Marex Spectron Group Ltd., a broker in London, show.

US: The latest US Economic Update from NAB forecasted the strengthening growth over the second half of the year and into 2014, driven by rising consumption expenditure on the back of increasing household wealth (rising asset prices), higher employment, and easing lending standards, as well as the ongoing rebound in housing construction. NAB also believes that the Federal Reserve will end its quantitative easing (QE) program at the end of this year with some tapering of the program (reduction in asset purchases) beforehand.

BONDS: Continued volatility today in markets as yields dipped in the secondary market on the back of the DMOs strategic decision only to sell N20 billion out of the N85billion they had on offer at the auction. While the DMO did not give any reason for this, it is obvious that they were not prepared to fill the auction at those levels and would rather look for a cheaper alternative in the interim. Yields pushed down about 70 bps from the previous close.

BILLS: Yields in the bill market dipped about 40bps in reaction to the outcome of the bond auction as the expectation is that a similar situation might occur at next week’s bill auction. Bills had sold off in the last few days in general reaction to the bearish sentiment in the markets as the local markets react to offshore participants.

MONEY MARKETS: OBB and unsecured O/N dipping to 10.25% yesterday as a maturity of N230billion in Tbills drove rates down yesterday”

COMMODITIES: West Texas Intermediate crude traded near the highest level in more than three weeks on signs of a U.S. economic recovery that may boost fuel demand.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD        1.3328       1.3338
GBPUSD         1.5670       1.5680
USDJPY          95.04        95.44
USDCHF         0.9245      0.9265
GBPEUR         1.1823       1.1833
USDZAR         9.9100      10.0100
USDNGN        161.00      161.75
JPYNGN         1.6940      1.7440
CHFNGN        174.15       178.15
EURNGN        214.58      218.58
GBPNGN        252.29      256.29
ZARNGN        16.25         18.25

West Texas Intermediate crude traded near the highest level in more than three weeks on signs of a U.S. economic recovery that may boost fuel demand.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.5483      USD 1 month        0.1945
7 Day            10.9517       USD 2 month       0.2298
30 Day         11.2017        USD 3 month       0.2732
60 Day         11.4505       USD 4 month       0.3181
90 Day         11.7917        USD 6 month       0.4112
USD 12 month     0.6832
Y/Y Consumer Inflation April 2013 :         9.1%
FX Reserves: 06 Junel2013 (USD bn)      48.423
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   161.80/90   160.05/15   161.05/15    159.95/05

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