14 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria said Wednesday it would not cut oil production outside the framework of the OPEC, even as nose diving crude prices caused by a global supply glut have ravaged its revenue.
US crude oil prices fell below $30 a barrel on Tuesday, prompting Nigeria, an OPEC member country, to call for an emergency meeting to address collapsing prices that have drained the coffers of Africa’s largest economy.
Minister of State for Petroleum, Dr. Ibe Kachikwu, said in Abu Dhabi on Tuesday that he expected an extraordinary meeting of the global oil cartel in “early March” to discuss the continued plunge in prices.
His push for an emergency meeting was however opposed by the United Arab Emirates, which like Saudi Arabia has resisted calls for production cuts by the oil cartel in order to retain market share.
FIXED INCOME: Decent demand was seen in bonds yesterday. This was attributable to short covering following Tuesday’s aggressive move. Trades went through at lows of 12.20% before bond prices took another leg lower and yields rose average 70bps from there. Market still very nervous but next week’s bond auction should calm some of this. Compared to bonds, T-bill market saw no volatility yesterday. Demand is evident (though not aggressive) and skewed to the short dated bills.
FX: The CBN weekly special auction is expected to hold today and the intervention rate will be maintained at $/NGN 197.00 as announced by the CB on Tuesday.
COMMODITIES: Brent oil traded near $30 a barrel as Iran moved closer to boosting exports and exacerbating a global glut.
Futures fell as much as 1.9% in London to the biggest discount to U.S. prices in about a year. Brent slid below $30 a barrel Wednesday for the first time since April 2004 amid speculation sanctions on Iran may be lifted by Monday, paving the way for increased shipments. U.S. stockpiles gained by 234,000 barrels last week while supplies at Cushing, Oklahoma, the country’s biggest storage hub, climbed further to a record, according to government data.
CHINA: Chinese stocks rebounded in volatile trading after dropping below the lowest levels in last year’s market selloff and briefly entering a bear market. Gains were led by small-company shares.
The Shanghai Composite Index gained 1.4% to 2,990.80 at 2:36 p.m., reversing a loss of as much as 2.8% and sending a gauge of volatility to the highest levels since September. The ChiNext small-caps index surged 5.5% after 28 listed companies vowed to take action to stabilize the market, with some pledging not to sell shares over the next six months.
U.K: The City of London will be left in a “significantly worse” position if the U.K. votes to leave the European Union, with the risk of foreign banks and investors relocating elsewhere, according to Barclays Plc Chairman John McFarlane.
New York would look to poach business, although turmoil in emerging markets has reduced threats from Singapore and Hong Kong, McFarlane, 68, said in a Bloomberg Television interview on Thursday. He was speaking in his capacity as chairman of The City UK and said a survey of the financial services lobby group’s members found 85% want to remain in the EU, while 4% favor leaving.
Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2015 9.37%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at January 12, 2016 28.737
Money Market Highlights
30 Day 8.1344
90 Day 9.5454
180 Day 11.0060
USD 1 Month 0.4245
USD 2 Months 0.5150
USD 3 Months 0.6236
USD 6 Months 0.8548
Tenor Maturity Yield (%)
91d 14-Apr-16 4.21
182d 14-Jul-16 7.27
364d 05-Jan-17 8.85
2y 31-Aug-17 10.99
3y 30-May-18 11.64
5y 13-Feb-20 12.53
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0757 1.0960
GBPUSD 1.4317 1.4518
USDJPY 118.00 118.02
USDCHF 1.00375 1.0139
GBPEUR 1.3172 1.3376
USDZAR 16.4686 16.6713