The oil market will be waiting for the next decision concerning plans to boost production as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) meets on Wednesday, August 3 following the expiry of the two-year deal.
This will come weeks after US President Joe Biden, to no avail, tried to persuade Saudi Arabia to boost production during a controversial visit to the kingdom.
The White House has been pressing the oil cartel to step up production to tame prices that have surged since Russia invaded Ukraine in late February but the group, which is led by Saudi Arabia and Russia, has stuck to modest increases so far.
The 13-member Organisation of the Petroleum Exporting Countries (OPEC), along with 10 allies that include Russia, had slashed production at the height of the COVID-19 pandemic in 2020 after a plunge in demand caused prices to sink to their lowest.
The group began to raise production last year, agreeing to add 400,000 barrels per day to the market. It backed an increase of nearly 650,000 barrels per day in June, still not enough to spark a big drop in oil prices.
The alliance’s output is back to pre-virus levels, but just on paper as a few members have struggled to meet their quotas.
All eyes will be on whether OPEC+ sticks to the same output policy or steps it up.
After his meetings with Saudi leaders in mid-July, Mr Biden said he was “doing all I can” to increase the oil supply but added that concrete results would not be seen “for another couple weeks” — and it was unclear what those might be.
Wednesday’s meeting will reveal whether his efforts were successful.
However, analysts warn against expecting any drastic increases with expectations that OPEC+ has to take into account the fact that the interests of Russia — a key player in the alliance — are diametrically opposed to those of the US.
The group will decide on output policy under a new secretary general, Kuwait’s Haitham Al-Ghais, who took office on Monday following the death of Nigeria’s Mohammed Barkindo last month after six years at the helm of affairs.
“I look forward to working with all our Member Countries and our many partners around the world to ensure a sustainable and inclusive energy future which leaves no one behind,” Mr Al-Ghais said in a statement.
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Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.
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Representatives of Bureaux de Change (BDC) operators in the Federal Capital Territory (FCT) Abuja have admitted that speculative activities of some of its members caused the crumbling of the Nigerian Naira to more than N700 to a Dollar at the parallel market segment of the foreign exchange (forex) market recently.
Last month, the indigenous legal tender sank to its lowest level by exchanging to the United States Dollar at N715/$1 in the unofficial FX segment.
This followed statements made by the governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, in Abuja after the Monetary Policy Committee (MPC) meeting.
After announcing the raising of the baseline interest rate in the country to 14.00 per cent, the apex bank chief said security operatives would begin to go after people withdrawing their Naira from banks with the purpose of hedging against the Dollar.
This triggered a panic in the financial system and investors and others started to liquidate their Naira holdings to buy the Dollar. With the country experiencing a shortage in the supply of Dollars, the local currency came under pressure, falling to an all-time low.
Worried that the Naira may eventually crumble, the Senate summoned Mr Emefiele and it was after this action of the lawmakers that officials of the Economic and Financial Crimes Commission (EFCC) began to raid some currency hawkers across major cities of the federation.
The arrest of FX traders on the streets eased the pressure on the local currency and last week, the Nigerian currency gained against the greenback and was sold at N638/$1 at a point.
On Friday, some Abuja BDC operators held a meeting with the chairman of the EFCC, Mr Abdulrasheed Bawa, in Abuja and during the gathering, they admitted that some speculators among them were behind the crashing of the Naira at the black market.
However, they promised to work in partnership with the agency to clean up the market, expressing optimism that the Naira’s rebound, which began after the EFCC’s intervention a few days ago, may eventually see the currency return to its pre-speculation value.
On his part, Mr Bawa said his meeting with forex traders was part of ongoing efforts to check the rising incidence of FX speculation which has brought pressure on the value of the Naira.
The EFCC boss said he wants to fashion out a collaborative stakeholders’ response to brazen forex speculation, especially in the parallel market which is hurting the country’s monetary policy by instigating a run on the value of the Naira.
According to him, similar meetings are planned for other BDC operators in the major commercial cities across Nigeria as well as with key players, regulators and operators of the Nigerian financial sector.
The bulls made a return to the local equity market on Friday, thanks to bargain hunters, who mopped up stocks in the consumer goods, banking and industrial goods sectors.
Their activities lifted the Nigerian Exchange (NGX) Limited by 0.28 per cent yesterday, raising the All-Share Index (ASI) higher by 140.03 points to 50,722.33 points from 50,582.30 points as the market capitalisation grew by N81 billion to settle at N27.358 trillion against the previous day’s N27.277 trillion.
Apart from the insurance sector, which declined by 0.40 per cent, every other counter closed higher, with the consumer goods index rising by 1.52 per cent. The energy space gained 0.37 per cent, the industrial goods counter appreciated by 0.35 per cent, while the banking landscape rose by 0.06 per cent.
Unlike the previous day, the level of activity improved on Friday, with the trading volume appreciating by 14.08 per cent to 148.8 million units from 130.5 million. The value of transactions rose by 18.65 per cent to N1.9 billion from N1.6 billion, while the number of trades expanded by 2.45 per cent to 4,091 deals from 3,993 deals.
Honeywell Flour ended the session as the most active stock, trading 22.0 million units valued at N64.1 million, GTCO sold 21.7 million shares worth N445.7 million, FBN Holdings transacted 11.3 million stocks for N123.8 million, Zenith Bank traded 10.2 million equities valued at N223.1 million, while Transcorp exchanged 8.7 million stocks for N9.9 million.
The market breadth was positive yesterday as the exchange finished the day with 24 appreciating stocks and 10 depreciating equities, indicating a positive investor sentiment.
Eterna topped the gainers’ log after its value rose by 10.00 per cent to N7.15 and was trailed by Multiverse, which grew by 9.94 per cent to N1.88. Japaul appreciated by 9.68 per cent to 34 Kobo, PZ Cussons grew by 9.63 per cent to N10.25, while Jaiz Bank improved by 8.86 per cent to 86 Kobo.
On the other side, Unilever emerged as the biggest price loser after its value went down by 10.00 per cent to N13.50 and was trailed by Skyway Aviation, which lost 8.76 per cent to finish at N6.25. Guinness Nigeria depreciated by 8.29 per cent to N83.00, Consolidated Hallmark Insurance declined by 7.69 per cent to 60 Kobo, while Regency Assurance decreased by 7.41 per cent to 25 Kobo.
The Naira continued its recovery against the American Dollar at the Peer-to-Peer (P2P) window of the foreign exchange market on Friday, August 5.
Data obtained by Business Post showed that the exchange rate of the Naira to the greenback in the FX market segment went in favour of the former by N2 as it traded at N669/$1 yesterday compared with the rate of N671/$1 of the preceding day.
In the Investors and Exporters (I&E) segment of the forex market, the local currency maintained stability against the US currency yesterday as its value remained unchanged at N430/$1 amid a decrease in the demand for FX yesterday as the turnover moderated by $38.30 million or 34.7 per cent to $71.92 million from the previous day’s $110.22 million.
But in the parallel market, the Nigerian depreciated against the Dollar on Friday by N7 to trade at N645/$1 compared with N638/$1 of the earlier trading day.
In the interbank segment of the market, the Naira also witnessed a loss against the British currency – the Pound Sterling as it weakened by N2.91 to wrap up at N508.02/£1 versus Thursday’s value of N505.11/£1 and against the Euro, the Nigerian currency declined by N2.67 to settle at N428.22/€1 versus N425.55/€1 of the previous day.
Meanwhile, eight of the 10 digital coins monitored at the cryptocurrency market on Friday gained points, with Ethereum recording a 4.1 per cent gain to trade at $1,719.73.
Dogecoin (DOGE) followed with a 2.3 per cent appreciation to close at $0.0697, Solana (SOL) mounted a 1.2 per cent gain to $40.34, Cardano (ADA) rose by 1.7 per cent to sell at $0.5174, Binance Coin (BNB) recorded a 0.8 per cent rise to trade at $315.58, Bitcoin (BTC) went up by 0.4 per cent to sell at $23,168.42, while Litecoin (LTC) climbed higher by 0.3 per cent to quote at $61.56.
But TerraClassicUSD (USTC) fell by 0.9 per cent to sell at $0.0334, while Ripple (XRP) recorded a 0.5 per cent slide to trade at $0.3741.