A Review of the Nigerian Energy Industry

Financial market products & services update

finance02 September 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: Range bound today, 30 point range for most of the day, traded between 162.28 – 162.60. Oil major sold some USD (Estimated at $65mio) into the market but that had a muted effect as demand was rife. Still expecting the state oil company to come in sometime this week or beginning of next week. CBN offered $350m and sold $349.83m at yesterday’s RDAS auction. Lowest intervention rate was 157.2873 (1% commission inclusive).

FIXED INCOME: Slow start to the week and month. Not a particularly busy session in both the T-Bills and bonds markets. The central bank sold N81bn of a 136-day OMO bills at 11.25% yield to try and mop-up excess liquidity. There was a bit of demand seen on the bonds while yields grew weaker in the bills market as we saw sellers yesterday following the mop-up and positioning ahead of the T-Bills auction on Wednesday.

NIGERIA: Civil unrest in the Niger River delta abated during August, leading to a jump in Nigeria’s oil production. International oil companies often face disruption from protests, sabotage and oil theft, as local groups demand that more oil money be used to develop the country, rather than transferred abroad. At 2.3 million barrels a day in August, Nigeria surpassed its last high, dating from January 2006.

USA: Hedge funds increased bullish positions on crude oil for the first time in more than a month, benefiting from a rally before the Labor Day holiday weekend. Money managers increased net-long positions in U.S.benchmark West Texas Intermediate oil by 0.6 percent in the seven days ended Aug. 26, boosting bullish wagers from a 16- month low, Commodity Futures Trading Commission data showed. WTI climbed 2.5 percent last week, the first gain since July.

COMMODITIES: Brent crude extended a two-month slide as OPEC’s production was seen increasing and manufacturing gauges in Europe and China missed estimates. West Texas Intermediate fell in New York. Futures slid as much as 0.4 percent in London, having retreated more than $9 in July and August. The Organization of Petroleum Exporting Countries boosted output by 891,000 barrels a day to 31 million in August, about the highest level in a year.

CHINA: China’s stocks rose, sending the benchmark index to a one-week high, amid speculation the government will accelerate stimulus after an official gauge of the nation’s manufacturing expanded at a slower pace last month. Beijing Aerospace Changfeng Co. and China Avic Avionics Equipment Co. rallied for a second day on the prospect the government will inject assets into defence stocks. Chongqing Changan Automobile Co., the partner of Ford Motor Co. and Mazda Motor Corp., gained 1.7 percent after first-half profit more than doubled.

Macro Economic Indicators
Inflation rate (YoY) for July. 2014                     8.30%
Monetary Policy Rate current                             12.00%
FX Reserves (Bn $) as at August 26th 2014     39.605

Money Market Highlights

O/N                               10.9167
30 Day                          12.8045
90 Day                          13.7062
180 Day                        14.5026
USD 1 Month               0.1565
USD 2 Months             0.1967
USD 3 Months             0.2336
USD 6 Months             0.3294
USD 12 Months           0.5646

Benchmark Yields
Tenor          Maturity           Yield (%)

91d                 04-Dec-14            10.61
182d               05-Mar-15           11.50
364d               06-Aug-15           12.82
2y                    16-Aug-16            11.12
3y                    31-Aug-17            11.08
5y                    29-Jun-19            11.14

Indicative Currency Exchange Rates
Bid        Offer

USDNGN      161.80     162.80
EURUSD       1.3029     1.3230
GBPUSD       1.6467      1.6668
USDJPY        104.83     104.85
USDCHF       0.9149     0.9251
GBPEUR       1.2520     1.2722
USDZAR       10.5969   10.7995
JPYNGN        1.4980    1.5991
CHFNGN       175.57     177.31
EURNGN      212.42     213.77
GBPNGN       268.26    269.64
ZARNGN       14.26       16.08

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