$85 per barrel milestone, Nigeria yet to seize the advantage.

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Markets

• Nigerian equities market ended last week on a positive note as the benchmark NGX All-Share Index (ASI) inched up 120.02 (0.18%) points to close at 65,325.37, representing a week gain of 0.2%, 4-week gain of 4.4%, and an overall year-to-date gain of 27.46%. Skye Shelter Fund led the gainers with 9.96% share price appreciation closing at NGN 76.20 per share, followed by Computer Warehouse Group (+9.82%), Glaxo Smithkline Consumer (+9.78%) and The Initiates (+9.3%).

• Oil prices edged higher on Friday after the International Energy Agency forecast record global demand and tightening supplies, propelling prices to the seventh straight week of gains, the longest such streak since 2022. Brent crude futures rose 41 cents, or 0.5%, to settle US $86.81 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 37 cents, or 0.5%, to settle at US $83.19. On a weekly basis, both benchmarks rose about 0.5%.

• Naira was mix at both the I&E and street markets. At the I&E window, Naira appreciated by 5.17%, closing at N740.60 against the US dollar. However, on the streets, it depreciated by 1.08% reaching N940 a dollar.

• US natural gas futures fell below US $2.8/MMBtu from a 5-month high hit above $2.9 on Wednesday, dragged by a bigger-than-expected storage build last week while investors continue to monitor demand and weather projections.

The price of crude oil has surpassed the US $85 per barrel milestone, yet Nigeria is struggling to seize the advantage.

Since late June, global oil prices have embarked on a notable ascent, surging by more than 16%. This upward trajectory is now propelling them into their fifth consecutive week of gains, marking the longest streak of positive movement since the energy markets were disrupted by Russia's full-scale invasion of Ukraine.

The latest increase in oil prices took place on Friday, bolstered by a promising forecast from the International Energy Agency (IEA). The IEA's projections indicated a record-breaking surge in global oil demand, accompanied by tightening supplies. This surge propelled oil prices into their seventh consecutive week of gains, a feat not seen since 2022.

On Friday, Brent crude futures exhibited a rise of 41 cents, equivalent to 0.5%, eventually settling at US $86.81 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures experienced a gain of 37 cents, or 0.5%, reaching a settlement point of $83.19. Over the course of the week, both benchmarks witnessed an approximate increase of 0.5%.

The International Energy Agency's analysis has unveiled a projection of a substantial rise in global oil demand, predicted to surge by 2.2 million barrels per day, reaching a historical peak of 102 million barrels this year. However, the outlook for global oil production is not as responsive, with forecasts indicating an increase of merely 1.5 million barrels per day, leading to a total production of 101.5 million barrels. These insights were shared in a report published this month by the IEA.

This widening gap between demand and supply has been exacerbated by production cuts executed by OPEC+ in a commitment to curtail output by over 1.6 million barrels a day through the end of the year. This move was a response to a significant drop of nearly 38% in oil prices from their peak the previous year.

Nonetheless, Nigeria finds itself in a less advantageous position amidst this global oil price rally that has pushed prices beyond the US $85 per barrel mark, surpassing the Nigerian oil benchmark of US $75. This disparity arises from a host of challenges plaguing the Nigerian oil and gas sector. The country's crude production has dwindled to a three-month low of 1.081 million barrels per day in July. This drop is attributed to persistent issues of crude oil theft and a leak at the Forcados terminal in the Niger Delta region, plummeting from 7.085 million barrels in June to a mere 2.82 million barrels in the reviewed month.

As a result of the constrained oil production in July, Nigeria fell short by 661,000 barrels per day during this period. This shortfall is particularly pronounced considering that the Organization of the Petroleum Exporting Countries (OPEC) had allocated the country a production quota of 1.742 million barrels per day for the same timeframe.

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National Headlines

• Transport fares up – As expected, the National Bureau of Statistics ((NBS) has shown that the average fare paid by commuters for bus, motorcycle, air, and water journeys went up, increasing by as much as 97.88% for inner city and 42% for intercity bus journeys in June, compared to May 2023. It reflects the observation that I shared after the near 200% increase in fuel prices on May 29^th – shorter trips doubled in prices while longer trips did not increase as much.

Global Headlines

• UK still below pre-covid GDP level – The British economy grew by 0.2% Q2 2023, but remains the only big, advanced economy that has not returned to pre – Covid 19 GDP level yet. After the results were released, sterling rose against the US dollar and Euro. The question now is how the Bank of England would respond when it meets next month September 21st.

This Week

• The Federal Government of Nigeria (FGN), through the Debt Management Office (DMO), will be conducting a bond auction today Monday, August 14, 2022. The total amount on offer is expected to be between N320 billion and N400 billion. There would be 14.55 per cent FGN April 2029 N80 billion to N100 billion, FGN June 2033 N80billion –N100 billion as well as 14.70 per cent FGN June 2038 N80billion –N100 billion worth of bonds, as well as June 2053 with 15.70%

• On Tuesday, 15^th August 2023, the Second quarter GDP growth of Japan is expected to be released. Similarly, the UK Unemployment rate is expected to be published on the same day.

• On Wednesday, 17^th August 2023, the U.K Inflation figure for July will be released.