Oil producers risk new crude price collapse

Producing nations risk an oil bust if they don’t reach a freeze agreement of some sort when they meet in Doha, Qatar, this weekend.

Market expectations are high and rising for a deal, and crude futures have been climbing as a result, but an accord that would halt production growth will be difficult to reach and difficult to keep. Even if there is an agreement among OPEC and non-OPEC producers, capping production would still leave a glut of oil on the world market.

Oil saw its latest pop after Russia’s representative to OPEC was quoted by Interfax on Tuesday saying that Russia hopes to reach a deal even though there are disagreements between Saudi Arabia and Iran. West Texas Intermediate futures settled at $42.17 per barrel, their highest close since November. Brent rose close to $45 per barrel.

“I think with all the countries gathering, if there is not an agreement, prices will fall sharply and for each of them, it means new pain in their budget. It will hurt them a lot,” said Daniel Yergin, vice chairman of IHS. “Being able to sustain prices convincingly above $40 is very much in their interest.”

Oil is now up 60 percent from where it bottomed in February, just five days before Saudi Arabia, Russia, Qatar and Venezuela said they would freeze production if others participated.

“I think there’s a lot invested now in a successful conclusion to this meeting so it would seem real easy to disappoint come Monday,” said John Kilduff, partner at Again Capital. Analysts say oil has seen most of the gains it would get from a freeze agreement, and Kilduff believes it could even trader lower on the news.

Some analysts do not expect a deal, and others say it’s still unclear how close the key players are to an accord. Interfax also reported that Russia said Iran was not critical to a production deal.

“The headlines are just reflecting the optimism from the Russian camp,” said Chris Weafer, senior partner at Macro-Advisory. “The Russians say there will be a freeze agreement because they want one, and they have no other choice. It’s quite clear that the Saudis don’t want to go to this meeting. This is something they’ve been almost dragged into, and they’ve indicated they prefer decisions stay within OPEC.”

CNBC Has More

NSE, LSE Dual Listing To Boost Capital Formation, Liquidity

The Nigerian Stock Exchange (NSE) has announced that the dual listing between NSE and London Stock Exchange (LSE) would facilitate seamless cross-border access for the nation’s capital market to ultimately drive deeper markets that enable capital formation for businesses by creating larger liquidity pools and greater competitiveness for Nigerian investors.

Addressing participants during the second NSE/LSE conference held in Lagos yesterday, the chief executive officer of the NSE, Mr. Oscar Onyema, said, “This synergy would enhance capacity and promote diversity of investment products to meet the needs of a wide range of investors and issuers.”

Onyema explained that as government grapples with the task of articulating a clear economic blue print for the short to midterm within which credible fiscal and monetary policies can emerge, the need to leverage and embrace the globalisation of economies and financial markets becomes clearer.

According to him, in order to position the nation’s  capital market as the sustainable financial center
in West Africa, and for Africa, there was need to facilitate the drive for wealth creation for Nigeria, while providing the platform to which global savings can be channelled.

Source: Leadership

Nigeria says China offered $6 billion loan for infrastructure – Reuters

By Felix Onuah

BEIJING, April 12 (Reuters) – China has offered Nigeria a loan worth $6 billion to fund infrastructure projects, the Nigerian foreign minister said on Tuesday.

The announcement came as both countries signed a currency swap deal to boost trade. Nigeria has been in talks with China on an infrastructure loan for months.

Nigeria is Africa’s largest economy and its top oil producer. But its public finances have suffered as the price of crude oil dropped around the world.

Although President Muhammadu Buhari wants to triple capital spending in 2016, he also needs to plug a projected deficit of $11.1 billion.

“It is a credit that is on the table as soon as we identify the projects,” Nigerian Foreign Minister Geoffrey Onyeama told reporters after Buhari met Chinese President Xi Jinping. “It won’t need an agreement to be signed. It is just to identify the projects and we access it.”

There was no immediate comment from China.

Continue to Reuters

Nigeria to raise 167.5 bln naira in treasury bills

LAGOS, April 12 (Reuters) – Nigeria plans to raise 167.51 billion naira ($843.67 million) in treasury bills with maturities ranging between 3-month and 1-year on April 20, the central bank said on Tuesday.

The bank aims to raise 36.78 billion naira in the 3-month paper, 35 billion naira in the 6-month note and 95.73 billion naira in the 1-year debt, using the Dutch auction system.

Nigeria issues short-dated debt to mop-up excess liquidity in the banking system to curb rising inflation, finance a portion of the budget deficit and help commercial lenders manage their liquidity.

($1 = 198.55 naira) (Reporting by Oludare Mayowa; Editing by Alison Williams)

China’s ICBC reaches agreement with Nigeria on yuan

BEIJING, April 12 (Reuters) – Industrial and Commercial Bank of China Ltd (ICBC) , the world’s biggest lender, and Nigeria’s central bank on Tuesday signed an agreement on yuan transactions, a Chinese Foreign Ministry official said.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, director general of the foreign ministry’s African affairs department, told reporters.
The agreement was reached following a meeting between Nigerian President Muhammadu Buhari and Chinese President Xi Jinping.

Nigeria’s inflation rises to almost 4-year high in March

LAGOS, April 12 (Reuters) – Nigeria’s annual inflation rose to a near four year high of 12.8 percent in March from 11.4 percent in February, driven by a rise in food prices, the National Bureau of Statistics said.

Africa’s biggest economy is facing its worst economic crisis in decades fueled by the collapse in crude prices, which has slashed government revenues, weakened the currency and caused growth to slow. The economy grew 2.8 percent last year, its slowest pace in decades.
Food prices, which account for the bulk of the inflation basket, rose by 1.4 percent points to 12.7 percent in March, the bureau said on its website.
“The higher price level was reflected in faster increases across all divisions,” the bureau said in a report.

The NBS expects inflation to end the year at 10.16 percent, above the central bank’s target upper limit of nine percent. The price index ended at 9.55 percent last year.

(Reporting by Ulf Laessing; Editing by Tom Heneghan)

Nigeria Grapples With Abrupt End to Rapid Growth – WSJ

By Drew Hinshaw and Joe Parkinson

LAGOS, Nigeria—In Africa’s top economy, the oil bust is beginning to hit the streets.
With 187 million people, and trillions of dollars in untapped crude oil, Nigeria was meant to power Africa’s rise. Instead, it is becoming—for the moment—a symbol of how fast and far low oil prices have dragged emerging markets down.

Months of dwindling oil revenue have prompted a scarcity of dollars here, as the government hoards foreign currency to safeguard shrinking reserves. That is starting to hit Nigerians rich and poor alike: On Monday, the country’s stock market fell almost 3% on news that MSCI is considering removing the country from its benchmark frontier markets index.

Meanwhile, the World Bank said Nigeria’s economic growth slid to 2.8% in 2015 from 6.3% the year before, and the International Monetary Fund says this year’s growth will slip to 2.3%, slower than the population, which adds 13,000 people daily.

Factories are closing because they can’t find dollars to import parts. Supermarkets are struggling to keep shelves stocked. Power plants have virtually stopped producing electricity because they can’t pay for maintenance. New shopping malls are empty and ordinary citizens are going to lengths to find some basic goods.

Continue on to the Wall Street Journal

Nigeria wants to boost non-oil income by 87 pct to offset oil slump – Reuters

By Chijioke Ohuocha

LAGOS, April 11 (Reuters) – Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters on Monday.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70 percent of state income.

Funding of the budget with an expected deficit of 2.2 trillion naira has been so far unclear.
Detailing its plans, the government expects to generate 3.38 trillion naira ($17 billion) this year from non-oil sources, up 87 percent from 1.81 trillion naira in 2015, the presentation showed.

Corporate income tax collection is expected to exceed the 700 billion naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said.

The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33 percent.

On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget.

The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16 percent now, the presentation showed. Loan repayments will be stretched.
Buhari has asked the United States for help in returning stolen Nigerian assets stashed in U.S. banks.

In March, the U.S. said it had frozen more than $458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3 billion of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects.

Nigeria eyes China’s panda bond market to help plug $11bn deficit

Nigeria is considering selling a Chinese panda bond to help finance a budget deficit of about $11bn, its finance minister has said.

“The opportunity now, with the renminbi being a reserve currency, we are looking obviously at the lowest cost of funds to fund our budget deficit. Initially we were looking simply at the eurobond but then we began to explore opportunities in the renminbi market so there is a possibility of issuing a panda bond,” Kemi Adeosun told the Financial Times and Reuters in an interview. Panda bonds are renminbi-denominated debt sold by foreigners into China’s bond markets.

Check out the Financial Times for more on the story

UPDATE! Naira FOREX Rates April 8th 2016 – Parallel Market


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Friday, April 8, 2016

The Naira rebounded slightly against the dollar to close at N322 at the end of the trading day and trading week on hopes of an Oil output freeze by OPEC and other oil producing nations. Sentiments on the president signing the budget in the coming weeks also hope boost the Naira at close.

Traders remain cautious based on low trading activity due to uncertainly on the demand and supply side. The trading week closed with Naira showing stability trading between 320-324 throughout the week.