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COVID-19 Update in Nigeria

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Naira remains stable across forex markets as external reserve continues to rise

Oil prices tumble on fears of global economic recovery
Commodities
OPEC+ forced to delay talks as disagreement in the cartel deepens
OPEC+ was forced to reschedule its meeting as it could not reach a unanimous decision on key policies.

Published
2 months agoon

The OPEC+ talks have been delayed for 2 days after the meeting ended on Monday without an agreement among its members with respect to the production cuts next year.
The meeting however, ended with 3 of the group’s heavyweights; Russia, Saudi Arabia, and the United Arab Emirates (UAE) holding different opinions as to how to handle things going forward. This outcome shows the deep division that exists within the cartel after several hours of talk did not achieve any result.
The meeting with OPEC+ was scheduled for resumption for tomorrow, but a rather surprising announcement came later in the day saying that the meetings had been moved forward to December 3 as more talks are needed.
According to a report by Oilprice.com, Saudi Arabia, regarded as the predominant and perhaps only swing producer in the group is said to favour an extension of the current level of oil production cuts, while Russia, the country that went against the deal in March over a similar issue, is said to favour a gradual increase in production starting in January.
On its own, the UAE, OPEC’s third-most prolific oil producer, is in support of extending the production cuts as-is into January and beyond only after all other OPEC members comply with their cuts. This was earlier alluded to by the UAE Energy Minister a couple of weeks ago.
The run-up to the meeting saw new cracks emerge in the relationship between UAE and other members of the cartel. Some informal discussions are expected to continue amongst members before the OPEC+ meeting on Thursday.
Ministers of the cartel are discussing whether to increase output in January as planned or maintain the current level of production levels for another 3 months. Some members of the group think the market is still too fragile to accept an increase in production, while others want to take advantage of the current rise in crude oil prices to increase production and boost their revenue.
The UAE’s Energy Ministry later issued a statement stressing the fact that it had always been a committed member of OPEC.
According to OPEC’s Monthly Oil Market Report, the UAE either met or exceeded its 2.59 million BPD quota in September and October, but fell short of its goal in August.
What you should know
- OPEC+ which is no stranger to disagreements had planned to ease some of its output cuts at the beginning of 2021 in anticipation of the recovery of the global economy after it had made huge production cuts in the wake of the coronavirus pandemic which had badly hit global oil demand.
- Although a breakthrough in Covid-19 vaccine development had seen oil prices hit an 8-month high, the second wave of infections particularly in Europe and the Americas has led to new lockdown measures that are affecting fuel consumption.
Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]


Commodities
Oil prices tumble on fears of global economic recovery
Brent crude futures dropped about 1%, to $54.65 a barrel, after losing 2.3% on Friday.

Published
20 hours agoon
January 18, 2021
Oil prices dropped at the first trading session of the week.
Oil traders are virtually going short, with the global market’s economic recovery outlook being called into question as COVID-19 infections rise.
What you should know: At press time, Brent crude futures dropped by about 1%, to $54.65 a barrel, after losing 2.3% on Friday. West Texas Intermediate futures lost about 1%, at $51.93 a barrel, having declined 2.3% also on Friday.
READ: Nigeria’s crude oil export earnings rebounded by 116% in November – OPEC
Increasing COVID-19 caseloads throughout the world continued weighing on oil prices, as oil traders doubted how long energy demand would hold up.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave key insights on macros weighing on oil prices
“Oil prices struggled from the mid-week after swelling production inventories then fused with the return of COVID in China, providing a not-so-rosy near-term demand signal. And adding for downside drift to the flow the slow roll-out of vaccines globally is walking back the timeline for jet fuel demand to take off.
The US dollar is strengthening due to the confluence of continental dilemmas. The global “risk-off” tone is also attracting US dollar safe-haven demand. A stronger US dollar seldom if ever makes for good bedfellows with higher oil prices.”
READ: OPEC+ deadlock in production cuts
What to expect: Still, it remains crucial for OPEC+ to monitor the demand variables around lockdowns and stay responsive to changing conditions. Underlying demand will not approach normal levels until 2022 at the earliest, and vigilance from OPEC+ will continue to be important in supporting oil prices.
Commodities
Gold prices suffer worst two weeks in a row since November
Gold futures prices at their most recent trading session settled at $1,829.90 an ounce, down by 1.2%.

Published
2 days agoon
January 17, 2021
Gold prices suffered significant losses at their most recent trading session.
The yellow metal lost its shine at the expense of charging U.S dollar, whose surge of late astonished many investors amid the currency debasement expected from the U.S President-elect’s proposed $1.9 trillion COVID-19 support programme.
READ: Gold suffers worst monthly drop in four years
What you should know
- Gold futures at their most recent trading session settled at $1,829.90 an ounce, down by 1.2%.
- Although the yellow metal’s recent loss on a weekly basis moderated to just 0.3% on the week, that loss added to the previous week’s plunge of 3.2% — handing gold its worst two weeks in a row since November.
- The greenback was an outlier at the last trading session despite drops seen in U.S bond yields associated with the benchmark 10-year U.S. note, whose resurgence in the previous week had been the catalyst for the U.S dollar comeback.
READ: Copper hits six months high, Industrial demand spur bullish run
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave insights on the odds weighing on the yellow metal in the near term.
- “With short dollar trades tempering over the great US dollar debasement story of 2021, it’s not such an easy glide path for gold to start the year. So, I suspect gold remains tied to the hip of the US dollar fortunes this quarter. The market then morphs into “sell the rally mode” as the US economy recovers tangentially to the vaccine distributions.”
READ: Silver surpasses three-week high, joins Bullish momentum
Bottom line
Investors are increasingly confronted with the reality that the pandemic is still far from being under control, thereby flocking back to the safe-haven currency despite the significant progress that was made in the past few months, and several COVID-19 vaccines already in the market.
Commodities
Oil prices suffer worst trading loss in a month
Oil prices were under pressure on fears of recent lockdown measures sighted in China.

Published
3 days agoon
January 16, 2021
Crude oil prices suffered their worst trading loss in a month, tumbling by more than 2% at Friday’s trading session.
Oil prices were under pressure on fears that recent COVID-19 lockdown measures sighted in the world’s largest buyer of crude oil, China, could in the coming days exhibit weakness in energy demand.
What you should know: A strong U.S dollar, the currency on which crude oil is primarily sold, made purchasing of the commodity less competitive for holders in other currencies like the Euro, Japanese yen, thereby weighing on oil prices
- U.S based oil contract, West Texas Intermediate futures, plunged by 2.2.% to settle at $52.36 per barrel. It is the oil contract’s biggest one-day drop since December 18, although it rounded out the week with a 0.5% upsides.
- The British-based oil contract, which is the global benchmark for crude, settled down $1.32, after losing 2.3% at $55.10. For the week, Brent crude prices lost about 1.6% in value.
- The world’s second-largest economy ramped up lockdowns yesterday, after reporting the highest number of daily Covid-19 cases in more than 10 months.
China capped a week that has resulted in more than 28 million people under lockdown as it suffered its first COVID-19 death on the mainland since May.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing macro conditions keeping oil prices relatively high, taking into account Saudi’s recent pledge to curb production, and the influx of COVID-19 vaccines to tame the ravaging virus:
“With Saudi Arabia providing the cornerstone and bridging the gap to vaccine oil market lift-off. With the renewed enthusiasm about the US demand recovery due to the prospects for more stimulus and the new administration’s pledge to focus on the vaccinations’ rollout, oil prices are lifting higher locking to hash out higher ranges.”
What to expect: Oil traders are entering a critical phase as oil remains sensitive to the news, with negative implications for the demand recovery.
The oil market recovery is vital for blunting the effect of higher nominal US Treasury yields through the reflationary channel. If oil doesn’t fly higher, the reflation trade could fall flat on its face.
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