01 August 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Saudi Arabia, the world’s largest crude oil exporter, has cut all official selling prices for its crude sales to Asian and the United States clients in August, signalling mounting competition for Nigeria and others.
The country’s state-owned oil company, Saudi Aramco, lowered the pricing terms for Arab Light sold to Asia by the most in 10 months as refineries grapple with falling margins and oversupply.
The company said on Sunday that it would sell cargoes of Arab Light in September at $1.10 a barrel below Asia’s regional benchmark. That is a pricing cut of $1.30 from August, the biggest drop since November, according to data compiled by Bloomberg.
All other official selling prices for Asian clients were reduced. The biggest cut was by $1.60 for Extra Light crude
FX: Indicative opening range today – $/NGN 319.50 – 323.50. Last update on FX reserves shows the 30-day moving average has printed a fresh low with the 30-day moving average now at $26.209bn [28.07.2016].
FIXED INCOME: Bonds remained quiet on Friday while CBN came back with OMOs through the regular auction and 2-way trading. At the regular auction, N62.97bn of 279 day paper was sold at 20.87% yield. Amount sold on 26 Jan 17 maturities via 2 way trading remains unknown. Despite the mop up, there was some demand seen in T-bills. N38.99bn was traded on the recently issued 27 July 17. average yield on bills now 16.82% (+250bps week on week) and bonds 15.47% (+13 bps week on week). T-Bill auction this week Wednesday. We expect the stop rates to mirror recent moves seen with the OMOs.
E.U.: European bank stocks declined, tempering gains in global equity indexes, amid investor skepticism over the usefulness of stress-test results and weaker oil prices. Shares and currencies in emerging markets rallied to the highest in about a year, while miners and industrial metals jumped.
Lenders in so-called peripheral nations weighed heaviest on an index of lenders, which sank as much as 1.9% after opening higher.
Declines in European banks put a dent in global equities, which rallied in July to their best month since March on prospects central banks will add to the stimulus or refrain from reducing it.
U.K: U.K. manufacturing shrank more than initially forecast in July, suffering its biggest drop in more than three years.
A Purchasing Managers’ Index slumped to 48.2, below the one-off flash reading of 49.1, Markit Economics said Monday in London. The index has only fallen below the 50 mark — which separates expansion from contraction — one other time since early 2013. The index was at 52.4 in June.
The report suggests that Britain’s decision to leave the European Union may have a harsher impact on the economy than initially expected.
COMMODITIES: Money managers have never been more certain that oil prices will drop.
They increased bets on falling crude by the most ever as stockpiles climbed to the highest seasonal levels in at least two decades, nudging prices toward a bear market. The excess supply hammered the second-quarter earnings of Exxon Mobil Corp. and Chevron Corp. Inventories are near the 97-year high reached in April as oil drillers boosted rigs for a fifth consecutive week. WTI fell by 14% in July, the biggest monthly decline in a year. It’s down by 19% since early June, bringing it close to the 20% drop that would characterize a bear.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2016, 16.50%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Jul 26, 2016, 26.209
30 Day 15.3576
90 Day 17.1664
180 Day 19.4665
USD 1 Month 0.4959
USD 2 Months 0.6074
USD 3 Months 0.7591
USD 6 Months 1.1117
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 27-Oct-16 15.35
182d 02-Feb-17 19.72
364d 06-Jul-17 20.67
2y 30-May-18 17.89
3y 29-Jun-19 15.58
5y 13-Feb-20 15.57
Indicative Currency Exchange Rates
USDNGN 319.00 322.50
EURUSD 1.1060 1.1262
GBPUSD 1.3072 1.3274
USDJPY 102.21 102.24
USDCHF 0.96385 0.9740
GBPEUR 1.1701 1.1904
USDZAR 13.7822 13.9857
JPYNGN 3.1690 3.1701
CHFNGN 333.59 335.27
EURNGN 350.60 351.97
GBPNGN 371.39 372.79