Oil Prices Slide On Stronger Dollar, Weak U.S Gasoline Demand

Taiwo Adekeye, FMVA

March 28, 2024

Oil prices fell for the second straight consecutive session on Wednesday due to the strengthening of the dollar and a sudden rise in U.S. crude and gasoline stocks. Brent crude futures for May was down 0.2%, to settle at $86.09 a barrel while the more actively traded June contract was down 22 cents to $85.41. The May contract expires on Thursday. U.S. West Texas Intermediate (WTI) crude futures for May delivery declined by 0.3%, to $81.35 a barrel.

Russia: Russia encounter difficulties in receiving oil payments as China, the UAE, and Turkey intensify scrutiny on banking processes.

Russian oil companies experience delays of several months in receiving payment for crude oil and fuel, as banks in China, Turkey, and the United Arab Emirates (UAE) become increasingly cautious of U.S. secondary sanctions. Payment delays reduce revenue to the Kremlin Russian state) and make them erratic, allowing Washington to achieve its dual policy sanction goals to disrupt money going to the Kremlin to punish it for the war in Ukraine while not interrupting global energy flows. However, several banks in China, the UAE and Turkey have boosted their sanctions compliance requirements in recent weeks, resulting in delays or even the rejection of money transfers to Moscow.

China:  Industrial profits in China rebound as conditions stabilize.

China’s industrial firms reported higher profits in the opening months of the year, reinforcing signs that an economic recovery was gaining traction despite persistent sluggishness in the property sector. Profits at China’s industrial firms climbed by 10.2% in the first two months from a year earlier, after a 2.3% profit decline for the whole of 2023. The increase follows positive indicators earlier this month indicating a stabilization in Asia’s largest economy. However, overall gains are moderated by ongoing fragility in China’s property market, highlighting a divergence in the country’s recovery from the pandemic.

Nigeria: The Naira strengthened on spot market after CBN’s Hawkish stance

The naira strengthened rose to a five-week high against the USD, a day after the central bank hiked interest rates to tame cancerous inflation and lifted restrictions on foreign investors participating in its fixed-income auctions. The local currency was up to 1,200 per dollar on the official market, strengthening above the parallel market levels at about 1,340. Africa’s largest economy has been grappling with dollar shortages that pushed its currency to a record low of 1,851 per dollar last month and dollar liquidity in the economy has been improving in recent times. However, the central bank on Tuesday raised its monetary policy rate by 200 basis points to 24.75% from 22.75% recorded in its 293rd MPC meeting last month after its largest hike in around 17 years.

Ethiopia: The Commercial Bank of Ethiopia successfully recovers $11 million lost due to a system glitch

The state-owned Commercial Bank of Ethiopia has regained over 75% of the $14 million it lost due to a software glitch earlier this month, which enabled customers to withdraw more funds than they had in their accounts. Around 78% of the 801 million birr withdrawn from cash machines or transferred during the night of March 15 has been returned. Most of the people that took advantage of the glitch are university students. However, the lender has published the names of the more than 500 people who are yet to return the balance on the nation’s national dailies.