Oil Prices Climb Amid Middle East Supply Fears, As Economic Hiccups Dampen Gains

Taiwo Adekeye, FMVA

Research Analyst

On Friday, oil prices closed higher, buoyed by tensions in the Middle East. However, the strength of the dollar and U.S. inflation data (In the 12 months through March, U.S. inflation rose 2.7% after an advance of 2.5% in February) dashed hopes for a near-term interest rate cut by the Federal Reserve, preventing prices from rising higher. Brent crude futures was up by 0.55%, closing at  $89.50 a barrel while U.S. West Texas Intermediate crude futures by 0.34%, to $83.85 a barrel.

Us Inflation increases marginally, consumer spending boosts Q2 outlook

Monthly inflation in the U.S. experienced a moderate increase in March ,yet persistent high expenses related to housing and utilities indicated that the Federal Reserve might maintain elevated interest rates for an extended period. Last month, the personal consumption expenditures (PCE) price index rose by 0.3%, consistent with the unchanged gain observed in February while Prices for goods saw a slight increase of 0.1%, driven by higher costs for gasoline, clothing, and footwear, which were partly offset by a decrease in prices for motor vehicles and parts. Prices for services increased by 0.4%, accelerating from February’s 0.3% rise, driven by a 0.5% uptick in housing and utilities costs, which encompass rents. Additionally, In the 12 months through March, inflation was up by  2.7% after advancing 2.5% in February

China industrial declines  in March, dampens expectations on economic recovery

China, the world’s second largest economy has it industrial profits declined in March, leading to slower gains for the quarter compared to the first two months, prompting concerns about the robustness of the recovery. Cumulative profits of China’s industrial firms rose by 4.3% to 1.5 trillion yuan ($207.0 billion) in Q1’ from a year earlier, slower than a 10.2% rise in the first two months. However, Profits fell 3.5% year-on-year in March. The high-tech manufacturing sector spearheaded growth, experiencing a 29.1% increase in profits in the first quarter while Profits in the automobile manufacturing industry was up by 32.0% on year in January-March.

FPI  inflow into the Equities Market (NGX) surges by 78.8% ($) YoY

In Q1’ 2024, foreign portfolio investments into Nigeria’s Stock Market (NGX) recorded a notable  surge to N93.37 billion, reflecting a remarkable 415% rise compared to the corresponding period in 2023. The investment equivalent in dollars amounted to $70.1 million for the quarter, as opposed to $39.2 million during the corresponding period in 2023. In the first quarter of 2024 there was an outflow of $90.03 million, Consequently  leading  to a net forex outflow of $19.87 million, contrasting with a net outflow of $37.8 million in the corresponding period of the previous year. However, March marked the highest transactions, totaling approximately $70 million, while February and January saw transactions of $49.4 million and $39.9 million, respectively, resulting in a combined total of $160.2 million (equivalent to N213.8 billion).