Akintunde Oyedokun
Research Analyst
Oil prices fell sharply on Wednesday as rising U.S. crude and gasoline inventories signaled weaker demand, while renewed U.S.-China trade tensions added to economic concerns. Brent crude dropped 2.09% to $74.61 per barrel, while WTI crude declined 2.3% to $71.03 per barrel.
A surge in U.S. inventories, driven by refinery maintenance and soft gasoline demand, put downward pressure on prices. Meanwhile, China’s new tariffs on U.S. oil and LNG in response to American levies raised fears of reduced global demand. Iran’s President also urged OPEC members to resist possible U.S. sanctions, which could disrupt supply. Analysts warn that oil prices remain volatile, caught between trade-driven demand concerns and potential supply shocks.
U.S. Services Sector Slows in January, Easing Price Pressures
U.S. services sector growth slowed unexpectedly in January as demand cooled, helping to curb price increases. The ISM’s services PMI fell to 52.8 from 54.0 in December, missing expectations. New orders declined, pulling down the prices-paid index to 60.4 from 64.4, signaling potential inflation relief. Meanwhile, services employment rose slightly, though it remains an unreliable predictor of payroll trends. The Fed kept interest rates steady last week after prior aggressive hikes to tame inflation. Friday’s jobs report is expected to show nonfarm payrolls rising by 170,000, with unemployment steady at 4.1%.
Indonesia’s Economy Grows 5.03% in 2024, Slowest in Three Years
Indonesia’s economy expanded by 5.03% in 2024, slightly below the previous year’s 5.05%, marking its slowest growth in three years. Despite central bank rate cuts, property tax incentives, and rising investment, global trade tensions and weak demand remain challenges. Political campaign spending and infrastructure projects boosted growth last year, but with Prabowo Subianto cutting infrastructure budgets for 2025, the outlook is mixed.
Analysts expect further stimulus, including potential rate cuts, to sustain growth, projected at 5.1%–5.15% in 2025. Prabowo’s free meals program and electricity tariff discounts are expected to drive activity in key sectors, though uncertainties in global trade could dampen momentum.
South Africa’s Private Sector Shrinks in January as Sales Decline
South Africa’s private sector activity contracted sharply in January, with output falling due to weaker sales, according to an S&P Global survey released Wednesday. The Purchasing Managers’ Index (PMI) dropped to 47.4 from 49.9 in December, marking its lowest level since July 2021.
David Owen, senior economist at S&P Global Market Intelligence, noted that new orders declined significantly, leading to a sharp reduction in output, particularly in the services sector. The weak start to the year suggests businesses struggled to regain customers, potentially impacting first-quarter growth.
Nigeria Increases 2025 Budget to ₦54.2 Trillion
President Bola Tinubu has increased Nigeria’s 2025 budget to ₦54.2 trillion ($36.4 billion) from ₦49 trillion, citing additional revenue from government agencies, including the Federal Inland Revenue Service (₦1.4 trillion), Nigeria Customs Service (₦1.2 trillion), and others (₦1.8 trillion).
The government had earlier projected a budget deficit of 3.89% of GDP, amounting to ₦13 trillion. Tinubu’s letter to the Senate, published Wednesday, highlighted that higher tax collections and customs duties contributed to the revision.
