25 August 2017, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria’s oil production, excluding condensates, was slightly below 1.8 million barrels per day in July, the country’s oil minister said on Thursday. Emmanuel Ibe Kachikwu, speaking on the sidelines of an event in the capital, Abuja, said there had been issues with aging pipelines. “We continue to have challenges, some of our pipelines are old, so these are basically technical. They are not militancy-induced stoppages, but they are basically maintenance-induced stoppages,” he said. Nigeria’s oil output has rebounded this year, aided by government efforts to placate militants in the Niger Delta region where the bulk of the country’s crude is produced, but it has struggled to maintain peak output levels. Crude production in the country was cut by more than a third last year when militants carried out a series of attacks on energy facilities in the southern Niger Delta oil hub.
FX: Same trend in the I&E window on the day. The market still offered in the 359-361 range as shown between banks and some corporate. FMDQ data, however, suggests trades are being executed at much lower levels in the I&E window. Turnover week to date is c $570mio.
FIXED INCOME: Not surprising how yesterday turned out. Bond yields leaked wider at open after Wednesday’s poor auction results. Some players tested buying the on-the-runs at levels 5bps below auction prints but were unsuccessful. Bond still closed on a bearish tone despite small offshore interest on the long end. Today, we should still patchy trading in the bond market. O/N closed at 10% because of a combination of FAAC inflow and OMO maturity. Bill market should react to this today with some buying on the short dates. N21.86bn was sold at today’s OMO.
U.K: The U.K. spent the summer publishing an avalanche of documents on Brexit but stayed silent on the one topic most likely to derail a deal: how much money it will pay the European Union. Investors have noticed. The U.K. made concessions to the EU in some of its position papers, yet Sterling still fell on Wednesday to its weakest level against the euro since October. Ignore that month’s so-called flash crash and the pound was at its lowest in eight years.
Next week marks the start of eight crucial weeks that will determine how Britain leaves its partner of four decades, with EU leaders set to rule in October whether U.K. Prime Minister Theresa May has done enough to unlock discussions over a future trade accord.
E.U.: When Mario Draghi steps up to the podium at Jackson Hole on Friday, he could be forgiven for expressing some satisfaction.
It was during his previous appearance at the U.S. Federal Reserve’s symposium in Wyoming three years ago that the European Central Bank president went out on a limb to lay the groundwork for quantitative easing. Back then, the euro area faced the risk of deflation, with near-record unemployment and anemic economic growth. Now those concerns are largely gone and governors are preparing to discuss when they might wind down bond purchases.
COMMODITIES: Oil trimmed a fourth weekly decline as traders braced for the impact of Hurricane Harvey on a U.S. refining hub in the Gulf of Mexico. Gasoline futures surged to the highest in four months.
Front-month crude futures rose 0.7% in New York, paring Thursday’s 2% decline. Gasoline gained as much as 4.6%. While some oil and gas production has shut in the Gulf, the storm is bearing down on an area in the U.S. state of Texas that is home to much of the nation’s refining capacity. If Harvey, currently a Category 2, makes the forecast landfall as a Category 3, it will be the strongest storm to hit since Wilma in 2005.
Macro Economic Indicators
Inflation rate (Y-o-Y) for June 2017 16.10%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at August 18, 2017, 31.598
Money Market Highlights
30 Day 18.9386
90 Day 21.3118
180 Day 22.6365
USD 1 Month 1.23444
USD 2 Months 1.26833
USD 3 Months 1.31722
USD 6 Months 1.45556
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 23-Nov-17 20.72
182d 01-Mar-18 20.47
364d 16-Aug-18 22.15
2y 16-Aug-20 16.89
3y 12-Jul-20 16.50
5y 27-Jan-22 16.37
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.1720 1.1922
GBPUSD 1.2733 1.2936
USDJPY 109.67 109.70
GBPEUR 1.0755 1.0959
USDZAR 13.0551 13.2580
EURNGN 424.30 425.67
GBPNGN 460.75 462.13