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Markets await crucial US data as OPEC publishes oil production figures

Markets await crucial US data as OPEC publishes oil production figures

The upcoming US inflation data this week will be crucial for the Federal Reserve’s decision on interest rates, potentially influencing investor sentiment. There’s also data on oil production by the Organisation of Petroleum Exporting Countries (OPEC).

Wednesday, April 10

Nigeria government to issue Treasury Bills

The federal government, through the Central Bank of Nigeria, will be issuing a Nigeria-Treasury Bill next week.

Read also: Energy transition must be just, equitable OPEC

The auction is usually done on Wednesdays, but sources close to BusinessDay said it might be moved to the next day due to the public holidays to be held next week.

At the last auction, the demand for the 364-day bills jumped to a record N2.48 trillion in a single auction, 17 times more than the N142 billion that was offered by the government, according to data from the Debt Management Office (DMO).

Dollar inflows into Nigeria have surged since the CBN lured foreign portfolio investors with higher interest rates on government debt and an undervalued naira.

The government has a maturing bill of N149.63 billion the next day.

US to release the March inflation figure

The U.S. Bureau of Labour Statistics will be releasing the country’s inflation figures on Wednesday.

In February, the Consumer Price Index, a broad measure of goods and services costs, increased to 0.4 percent for the month and to 3.2 percent from a year ago, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.

The monthly inflation rate increased from 0.3 percent to 0.4 percent month-on-month.

According to a Forbes forecast, if inflation comes at a monthly rate close to 0.3 percent or lower for March, that should be sufficient for the Fed to keep its plan to start cutting interest rates this summer.

If the report shows a 0.4 percent monthly increase or greater, that would be a concern. It would suggest relatively high inflation readings seen in January, and to a lesser extent in February, are perhaps more of a trend.

It said that monthly inflation at or below 0.2 percent would generally be considered positive news, “perhaps giving more conviction to rate-cutting plans.”

The Consumer Price Index (CPI) measures the change in the prices of goods and services contained in a basket of consumer items.

The central bank pays very close attention to this figure in its role of maintaining price stability.

“Analysts forecast that March’s oil production data will increase marginally due to low cases of reported oil theft.”

Read also: Nigeria oil production faces OPEC cut hurdle

Thursday, April 11

Oil and gas production report (full year 2023)

The National Bureau of Statistics (NBS) will release the full-year report on oil and gas production on Wednesday.

BusinessDay reported that Nigeria’s oil production slumped by 104,062 barrels per day (bpd), raising concerns about the future of the country’s petrodollar income amid the lingering foreign exchange crisis in the country.

The nation in the fourth quarter of 2023 recorded an average daily oil production of 1.55 million barrels per day (mbpd), higher than the daily average production of 1.34 mbpd recorded in the same quarter of 2022 by 0.21 mbpd.

This is equally higher than the third quarter of 2023 production volume of 1.45 mbpd by 0.10 mbpd.

The report was last published in 2016.

OPEC: Monthly Oil Market Report 2023

The Organisation of the Petroleum Exporting Countries (OPEC) will release its monthly oil market report on Thursday.

Analysts forecast that March’s oil production data will increase marginally due to low cases of reported oil theft.

Mele Kyari, Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), has announced the company’s effort in tackling cases of oil theft in the country, stating that 6,409 illegal refineries had been deactivated in the Niger Delta region of the country.

“We have deactivated 6,409 illegal refineries in the Niger Delta region. Today, we have disconnected up to 4,846 illegal pipes connected to our pipelines; that is out of 5,543 such illegal connection points. That means there are a vast number of such connections that we have not removed.”

Nigeria’s crude oil production for February recorded a decline, dropping to 1.32 million barrels per day (mbpd) compared to its January output, which stood at 1.46 mbpd, OPEC revealed.

The reduction in output was a setback for Africa’s largest oil producer, impacting both its economy and global oil markets.

The decrease of approximately 140,000 barrels per day highlights challenges faced by the Nigerian oil industry, including infrastructure constraints, security issues in oil-producing regions, and operational disruptions.

These issues have not only hampered production levels but have also hindered the country’s efforts to fully harness its oil resources for economic growth and development.

Read also: Oil industry needs $14trn investment to meet global demand – OPEC

America to issue a 30-year bond

The U.S. Treasury will carry out a 30-year bond auction on Thursday.

At the previous auction in March, the yields decreased to 4.33 percent from 4.36 percent.

Last month, the US Fed held interest rates steady at a range between 5.25 percent and 5.5 percent, which it has held since July 2023.

U.S. Treasury bonds have maturities ranging from ten to 30 years. Governments issue treasuries to borrow money to cover the gap between the amount they receive in taxes and the amount they spend to refinance existing debt and/or raise capital.

The rate on a Treasury bond represents the return an investor will receive by holding the bond for its entire duration. All bidders receive the same rate at the highest accepted bid.

Yield fluctuations are monitored closely as an indicator of the government debt situation. Investors compare the average rate at auction to the rate at previous auctions of the same security.

Naira to continue its stability at N1200

The naira is expected to maintain a steady appreciation, defending itself both at the official window and on the street this week.

It strengthened in both the official and parallel market segments following the Central Bank of Nigeria’s (CBN) move to clear all verified FX backlogs (final tranche of $1.5 billion).

Many analysts see the naira as moderate at N1,200 for some time before hitting N1,000 to a US dollar later in the year, given the continued monetary tightening conditions.

“Unless something extraordinary happens on the fiscal side, the momentum of progress towards an appreciating naira will probably continue for the next few months,” Ike Chioke, group managing director of Afrinvest, said in an interview on Friday.