Oil Prices Decline For Fourth Straight Session On Concerns Over U.S Inflation

Taiwo Adekeye, FMVA

Research Analyst

Oil prices dropped for the fourth straight session on Thursday amid concerns over the possibility of sustained higher U.S. interest rates, which have raised apprehensions regarding demand growth in the world’s largest oil market. S&P Global data revealed an uptick in U.S. business activity this month, yet manufacturers noted a sharp increase in prices across various inputs, indicating a potential rise in goods inflation in the upcoming months. Brent crude futures was down by 0.7% to close at $81.36 a barrel, the lowest since January. U.S. West Texas Intermediate (WTI) crude futures fell to 0.9% closing at $76.87 a barrel, a three-month low.

US new home sales declined  in April, buoyed by hike in mortgage rate

In April, the sales of new single-family homes in the U.S. declined beyond anticipated levels, attributed to a rebound in mortgage rates and increased prices, signaling a slowdown in the housing market’s momentum for the second quarter. New home sales dropped by 4.7% to a seasonally adjusted annual rate of 634,000 units last month while the sales pace for March was revised lower to 665,000 units from the previously reported 693,000 units. Additionally, there were 480,000 new homes on the market at the end of April, up from 470,000 units in March. At April’s sales pace it would take 9.1 months to clear the supply of houses on the market, up from 8.5 months in March.

UAE economy expanded by  4.3% in Q4’ 2023

The United Arab Emirates’ (UAE) economy grew by 4.3% year-on-year in the fourth quarter of 2023, with non-oil economic growth vastly outperforming overall GDP, while non-oil GDP surged 6.7% in the same period. The top sectors experiencing growth included financial, insurance, transportation and storage, as well as real estate and construction. the estimated real GDP growth for 2023 stands at 3.6%, with non-oil GDP growth reaching 6.2%. This growth occurred despite a decrease in oil activity in the previous year, driven by reduced production and prices, impacting all regional oil and gas producers.

French private sector activity shrank in May, PMI data reveals

France’s private sector unexpectedly declined  in May after an expansion that was recorded  in April, services industry and  manufacturing poses a contraction in activity. Purchasing managers index for the services sector, compiled by S&P Global, fell to 49.4 from 51.3 recorded in  the month before. The flash manufacturing PMI rose to 46.7 points, above April’s final manufacturing PMI of 45.3. The flash composite PMI, which comprises the two main sectors, fell to 49.1 points from 50.5 in April. Conclusively, the French economy, the second-largest in the eurozone, is expected to see a modest expansion in the second quarter following a 0.2% growth in the first quarter.

CBN raises Over N638bn in T-Bills  auction, yield climbs 26%

The Central Bank of Nigeria (CBN) made available a total of N508.98 billion, and subscription levels exceeded the initial offer significantly, indicating sustained interest in fixed-income securities buoyed by the apex bank hawkish stance on Tuesday at the MPC meeting. Despite the excessive demand, only around N638.98 billion was allocated  to investors, with the 364-day tenor receiving the largest share. The oversubscription recorded in the treasury bills mirrors a broader liquidity issue for the central bank, which has been grappling with efforts to manage money supply. The central bank has tightened liquidity by increasing the cash reserve ratio of commercial banks with  cash reserver ratio and liquidity ratio of commercial banks currently reading 45% and 30% respectively. The central bank has tightened liquidity by raising the cash reserve ratio for commercial banks, which currently stands at 45%, alongside a liquidity ratio of 30%.