A Review of the Nigerian Energy Industry

Local & international financial markets, products & services update

*Financial markets.

30 June 2018, Sweetcrude, Lagos — The local and international financial markets, products and services update.
NIGERIA: Contributions from Nigeria’s state-run oil company to the nation’s Federation Account were not in line with expectations and deemed “unacceptable”, Finance Minister Kemi Adeosun said. This created a deadlock at the last monthly meeting of the Federation Account Allocation Committee, chaired by Adeosun, and negotiations are going on with the Nigerian National Petroleum Corp., she said Thursday in an emailed statement. “Based on oil price, oil quantity you can pretty much calculate what you are expecting to see in the Federation Account and if the figure is less, then the right question that any stakeholder must ask is why?” the minister said. Nigeria’s Excess Crude Account, which holds the country’s oil savings, has a balance of $1.9 billion dollars, she said. Nigeria is Africa’s top crude oil producer.

FX: Liquidity starting to trickle down into the interbank market, offers shown at the 362.50 handle. Yesterday’s turnover reports from FMDQ ($101.79) show that we had another drop from the previous day. We have seen the NIFEX touch a new high or $/NGN 344.93, breaking the $/NGN 345 becomes a technicality.

FIXED INCOME: Trickle of demand coupled with price action pushed bond yields lower at the close of yesterday’s session. However, this doesn’t signal the end of the weakness.

Bills traded sideways in the face of dull liquidity but should regain bullish momentum after FAAC inflows expected today.

Feelers in the market suggest the CBN might waive further OMOs this week despite expected flow and given the recent trend of issuance.

U.K: The U.K. construction industry fared far better than previously thought during a snow-blighted first three months of the year, giving an unexpected boost to the economy.

Building output fell 0.8% instead of the 2.7% estimated last month, the Office for National Statistics said Friday. Overall economic growth was revised to 0.2% from 0.1%. Separate figures showed the current-account deficit narrowing.

CHINA: China is slowly following through on pledges to open up to foreigners, as an impending trade war with the U.S. focuses attention on Beijing’s grip over doing business in the world’s second-largest economy.

On Thursday the government formalized the easing of foreign investment limits on a range of industries from banking to agriculture, updating its so-called negative list of industries where overseas investors are restricted or banned.

COMMODITIES: Oil is poised for the longest run of quarterly gains in eight years as fears over global supply disruptions overshadow OPEC’s decision to ease its historic output curbs.

Futures in New York were on course for a 13% increase in the April to June period, rising for a fourth consecutive quarter. Prices have rallied over 12% in the last two weeks as a tougher U.S. stance on Iran threatens to cut exports from OPEC’s third-largest supplier. A concern is rising that lower output from the Persian Gulf state will strain the producer group’s spare capacity at a time when the market is already grappling with shrinking American inventories, a Canadian oil-sands outage, as well as turmoil in Libya.

Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2018                     11.61%
Monetary Policy Rate current                               14.00%
FX Reserves (Moving Avg Bn $) as at June 13, 2018,     47,627

Money Market Highlights

O/N                          15.6667
30 Day                     14.4289
90 Day                     14.8738
180 Day                   15.7597
USD 1 Month          2.09350
USD 2 Months         2.17113
USD 3 Months         2.33438
USD 6 Months         2.50063
USD 12 Months       1.72400

Benchmark Yields
Tenor      Maturity      Yield (%)

91d          27-Sep-18     12.87
182d        27-Dec-18     13.07
364d        04-Apr-19     13.69
2y            13-Feb-20     13.27
3y            15-Jul-21      13.55
5y            27-Jan-22     13.71

Indicative Currency Exchange Rates
Bid        Offer

USDNGN (I&E)       360.00     362.00
EURUSD                  1.1557     1.1760
GBPUSD                  1.3069     1.3365
USDJPY                   110.72      110.95
GBPEUR                  1.1198      1.1470
USDZAR                  13.4489    13.8536
EURNGN                 417.70      421.50
GBPNGN                 474.04      477.58

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