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Crude oil falls as market braces for more Iranian oil

15 January 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

TOKYO (Reuters) – U.S. crude oil futures fell in Asian trade on Friday, heading lower after posting the first significant gains for 2016 in the previous session, as the prospect of additional Iranian supply looms over the market.

West Texas Intermediate (WTI) was down 48 cents at $30.72 a barrel at 0345 GMT. On Thursday the contract rose 72 cents, or 2.4 percent, to settle at $31.20. It hit a 12-year low of $29.93 earlier this week.

WTI is on track to post a third consecutive weekly loss, down more than 6 percent. The contract is down nearly 18 percent from a 2016 high on January 4.

Brent crude was down 20 cents at $30.68 a barrel. The global benchmark settled up 72 cents, or 2.4 percent, at $31.03 a barrel on Thursday, after falling to $29.73, its weakest since February 2004.

Over the previous eight sessions, Brent had lost about $7 a barrel, almost 20 percent.

Western sanctions on Iran are expected to be lifted within days, potentially paving the way for more crude oil exports from the country, under a landmark agreement on Tehran’s disputed nuclear programme.

“This is three or four months ahead of what the market was thinking last year, so it just adds fuel to the fire,” said Tony Nunan, Oil risk Manager, Mitsubishi Corp in Tokyo.

Iran has removed the sensitive core of its Arak nuclear reactor and U.N. inspectors will visit the site on Thursday to verify the move crucial to the implementation of the atomic agreement with major powers, state television said on Thursday.

Any additional oil from Iran would add to the glut that has pushed oil prices into a deep slump since the middle of 2014.

“It is the wrong time for Iran to be returning to the oil market, both for the market and likely also for Iran,” Phillip Futures said in a note on Friday.

“It would have been so much more ideal for Iran to return to the oil scene if prices were soaring at $100,” it said.

 

 

(By Aaron Sheldrick. Reporting by Aaron Sheldrick; Editing by Richard Pullin)

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Nigeria stocks hit 3-1/2-year low as funds sell on naira woes

14 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s share index tumbled 3.4 percent on Thursday and hit its lowest point in almost 3-1/2 years, spooked by the weak outlook for the currency, traders said.

The share index, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, has fallen for five straight days, sliding below the psychologically important 25,000 point line not seen since September 2012.

At the market close, the index was down 3.4 percent at 24,239 points. The index has dropped 12.4 percent in the first nine days of trading this year.

Currency and stock markets in Africa’s biggest economy have been hit hard by the fall in the price of crude oil, Nigeria’s main export, which has slashed government revenues and triggered an exit of foreign investors.

“From what foreign investors are telling us, when they have confidence in the naira/dollar exchange rate they can then make investment decisions,” Oscar Onyema, CEO of the Nigerian Stock Exchange told Reuters.

The naira has dived 34 percent on the black market compared with its official level of 197 after the central bank stopped dollar sales to retail currency outlets. The move has intensified speculation that Africa’s top oil producer will have to formally devalue its currency soon.

Onyema said the bourse expected 2016 to be challenging for the market after the index shed 17.4 percent last year with losses continuing into this year, as oil prices plunged and the domestic economy faltered.

Foreign buyers, who accounted for 54 percent of trading volumes, were on the sidelines owing to the lack of clarity on Nigeria’s forex policy, highlighting naira weakness as a deterrent to a market rally in 2016, he said.

The index of Nigeria’s top 10 banks fell 4.69 percent to lead the bourse lower. Top decliners included Seplat, Oando, Guaranty Trust Bank and FBN Holdings all down more than 9 percent.

“With crude oil prices down, accretion to FX reserves is out of the question … putting investors on red alert. The central bank may not be able to meet all the demand for FX even if it were to devalue,” said Ayodeji Ebo, head of research at Afrinvest.

 

(Reporting by Chijioke Ohuocha and Oludare Mayowa; Editing by Hugh Lawson)

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Kenya aims to cut external, fiscal deficits

14 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s economy is expected to grow 6.1 percent in 2016 and the government wants to trim ballooning budget and current account deficits to steady the economy, its finance minister said on Thursday.

Kenya, East Africa’s biggest economy, set a budget deficit target of 8.7 percent for the 2015/2016 fiscal year starting July, unnerving some investors who were also uneasy about Kenya’s current account deficit, which stood at above 8 percent.

The current account deficit was fuelled by a growth of imports like oil and consumer goods which was not matched by growth in exports. The budget deficit swelled due to increased spending on infrastructure projects and local government units created in 2013.

Officials and investors say the government has to deal with the deficits to boost investor confidence and stave off instability in the currency and borrowing rates. The shilling lost 11 percent against the dollar in 2015, but faired better than most African currencies.

Finance Minister Henry Rotich said the global slump in the price of crude oil had helped the country’s current account deficit to improve due to a lower import bill.

“With the measures we are taking to cut the fiscal deficit, the twin deficits will obviously go down,” he told Reuters by phone.

“We are aiming at around 6.5 percent (current account deficit) and also getting our fiscal deficit, including grants, coming down to about 4.5 percent.”

The Treasury wants to start attaining those targets from the next fiscal year and into the medium-term, Rotich added.

He said Kenya was reviewing all government ministries’ expenditure plans for this fiscal year with a view to cutting unnecessary items and reducing borrowing.

“By the end of this month we will have known what savings we are likely to achieve from the exercise,” he said, adding the measures will be contained in a supplementary budget to be taken to parliament for approval.

Growth was expected to be 6.1 percent this year, slightly up from last year’s projection of about 5.8 percent. Rotich said growth will be driven by public investments in infrastructure, a recovery in tourism and farming.

“We are still seeing infrastructure supporting the growth. Construction remains strong. We see recovery of tourism boosting that. With the favourable weather, we see agriculture will also be strong,” he said.

The government is investing in a Chinese-built 327 billion shilling ($3.2 billion) modern railway, tarmac roads and power plants. Tourists have started to return to the country’s beaches and game reserves after key Western markets like Britain lifted travel warnings.

The warnings had been put in place after a string of attacks by al Shabaab militants from neighbouring Somalia.

Rotich said the main risks to Kenya’s growth outlook were global developments including any slowdown in the Chinese economy, the direction of the oil price and U.S. interest rates.

“The risks continue to be external developments. It has become difficult to get a full feel of forecasts for global economic developments,” he said, adding the main risk at home was any adverse weather like poor rainfall.

 

(By Duncan Miriri. Editing by Drazen Jorgic)

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Nigeria approves $200 million World Bank loan for projects in Lagos

14 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria’s government has approved a $200 million loan from a World Bank agency to develop infrastructure in Lagos state, its commercial hub, the minister for works, power and housing said on Wednesday.

The loan was the second tranche of a total of $600 million lent by the International Development Association to the Nigeria government for Lagos state since 2010, Babatunde Fashola said.

Lagos, a mega-city of 21 million people in the state of the same name, is the commercial engine of Africa’s biggest economy. Its gross domestic product accounts for about a third of Nigeria’s overall GDP.

Fashola, who did not give details of any projects for which the loan would be used, said the money had been intended for distribution in three tranches each of $200 million to end in 2013 but had been delayed.

“It suffered delays as a result of partisan political differences in the last dispensation. After the first tranche was disbursed there was a freeze on the second tranche,” he told reporters.

Fashola said the loan was to be repaid over 25 years at an interest rate of 2.5 percent.

 

(Reporting by Felix Onuah; Writing by Alexis Akwagyiram; Editing by Chijioke Ohuocha, Larry King)

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Ugandan shilling extends losses as banks seek dollars

13 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KAMPALA (Reuters) – Uganda’s shilling extended losses on Wednesday as banks sought to cover short dollar positions amid uncertainty before next month’s presidential election and traders also cited an excess in local currency liquidity.

By 0948 GMT, commercial banks quoted the shilling at 3,475/3,485, compared with Tuesday’s close of 3,450/3,460. The shilling has lost nearly 3 percent of its value against the dollar so far this year.

“There’s general uncertainty being generated by the coming election so there’s a lot of speculation-driven demand by banks to cover short positions,” said Shahzad Kamaluddin, a trader at Crane Bank. He also noted a lot of shilling liquidity.

The presidential election is due on Feb. 18, and some analysts are concerned about possible vote-related violence.

 

 

 

(Reporting by Elias Biryabarema; Editing by Edmund Blair)

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Tanzania’s Q3 2015 GDP growth boosted by construction, mining

13 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

DAR ES SALAAM (Reuters) – Faster growth in the construction, mining and transport sectors pushed Tanzania’s growth higher in the third quarter of 2015 compared to the same period a year earlier, the statistics office said on Wednesday.

The economy grew 6.3 percent year-on-year in the third quarter compared with 5.4 percent in the same quarter in 2014, the state-run National Bureau of Statistics (NBS) said.

“Sectors that drove GDP growth in Q3 2015 include construction, mining and quarrying and transport,” Albina Chuwa, director general of NBS, told a news conference.

Tanzania’s total exports of goods and services during July-September 2015 rose by 3.3 percent, Chuwa added. Gold accounts for 89 percent of Tanzania’s mineral exports.

 

(Reporting by Fumbuka Ng’wanakilala; writing by Drazen Jorgic; Editing by George Obulutsa and Andrew Heavens)

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Nigeria’s “bad bank” AMCON seeks bids for stake in Peugeot plant

12 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s state-backed AMCON “bad bank” said on Tuesday it plans to sell its majority stake in Peugeot Automobile Nigeria (PAN) Limited, a local joint venture with the major French automaker, and is seeking bids from investors.

Peugeot Citroen is the technical partner to the Nigerian assembly plant, which has capacity to assemble 240 cars a day, PAN said on its website.

In a statement, the Asset Management Corporation of Nigeria (AMCON) said it owned 79.3 percent of PAN Nigeria Limited, having acquired the stake four years ago after purchasing the company’s debt and taking some as equity.

PAN Nigeria Limited was set up in 1972 as a joint venture between the Nigerian government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s.

But operations nosedived and the company accumulated bad loans shortly after the government sold its stake via a privatisation to local core investors in 2006.

AMCON said PAN Nigeria had assets totalling 24.96 billion naira ($125.43 million) as of December 2014 and equity of 11.98 billion naira, and was seeking investors with experience in automobile manufacturing to buy the stake on offer.

Bids will close on Jan. 26 at 1600 GMT, it said.

President Muhammadu Buhari is keen to promote a “Made in Nigeria” industrial policy. In November, he met Peugeot’s executive vice president for Africa and the Middle-East, Jean-Christophe Quemard, to discuss the revival of local production.

The government under a National Automotive Industry Development Plan has ordered local car distributors to come up with plans for new assembly plants, along with threats of imposing prohibitive import duties.

U.S. carmaker Ford Motor Co’s partnership with a local car dealer has built its first model in Nigeria at a new assembly plant in November and said it will produce an initial 10 vehicles a day for the domestic market.

The auto market in Africa’s biggest economy has huge potential but only a small number of new vehicles are sold annually because the sector is dominated by imported used vehicles, and the absence of an industrial policy that would encourage suppliers to set up in Nigeria has stunted growth.

AMCON was set up to absorb bad loans from banks after a $4 billion bailout in 2009 rescued nine lenders from collapse. AMCON then bought bad loans at a discount in exchange for government-backed bonds and has since been selling off collaterals against those loans to pay bondholders.

 

(Reporting by Oludare Mayowa; Writing by Chijioke Ohuocha; Editing by Mark Heinrich)

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UAE moves to quash talk of OPEC emergency meet as oil slumps

12 January 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

ABU DHABI (Reuters) – The United Arab Emirates moved to quash talk of a potential emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC) after Nigeria’s oil minister said on Tuesday a “couple” of members had requested a gathering.

Benchmark Brent crude futures slipped towards $30 a barrel to a near 12-year low before rising slightly. They have shed almost three-quarters of their value since mid-2014.

Such market conditions supported an emergency meeting to review whether OPEC should change strategy, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told reporters on the sidelines of an energy conference in Abu Dhabi.

However, UAE Energy Minister Suhail bin Mohammed al-Mazroui later told the same conference the current OPEC strategy was working, adding that time was needed to allow this to happen — perhaps between one and 1-1/2 years.

“I’m not convinced OPEC alone can change or can solely unilaterally change this strategy just because we have seen a low in the market,” Mazroui said.

Mazroui added that while the first half of 2016 would be “tough” for the oil market, there would be a gradual recovery later in the year, aided by an expected drop in non-OPEC production.

Indeed, OPEC has no plan to hold an emergency meeting to discuss the drop in oil prices before its next scheduled gathering in June, two OPEC delegates said on Tuesday.

OPEC’s strategy of maintaining production levels, instead of reducing supply to allow prices to recover, has been aimed at defending market share at the expense of higher-cost producers such as those in the U.S. shale sector.

The supply glut is likely to be exacerbated in 2016 by the return of Iranian supply to the market, once Western sanctions have been lifted.

“I think all the members including Iran have the right to increase their production. I don’t think we are going to restrict anyone,” Mazroui said.

Such prospects have led oil analysts to downgrade their forecasts in recent days, with Standard Chartered saying prices could drop to $10 a barrel.

The likelihood of a meeting taking place will hinge on the attitude of OPEC heavyweight Saudi Arabia, which has been at the vanguard of resistance to a production cut.

“Saudi Arabia‎ has never held the position that it does not want to talk,” Kachikwu said. “In fact, it was very supportive of a meeting before June, at the time when we held the December meeting, if (there was a) consensus call for it.”

 

(By Rania El Gamal and Maha El Dahan. Writing by David French; Editing by Jason Neely and Dale Hudson)

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South African rand still fragile after sharp fall at start of week

12 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand remained on shaky ground against the dollar on Tuesday after tumbling as much as 9 percent in the previous session over concerns about both the Chinese and local economies.

The JSE securities exchange’s Top-40 futures index was down 0.97 percent, suggesting the local bourse would open more than 420 points lower at 0700 GMT.

At 0653 GMT, the rand traded 0.51 percent softer at 16.8850 per dollar compared with Monday’s close.

The rand had fallen to a record 17.9950 during Asian trade on Monday, on fears that China wants to weaken its currency aggressively and boost its export competitiveness.

It fared worse than most of its emerging market peers, reflecting additional concerns about the direction of policy in Africa’s most advanced but struggling economy after President Jacob Zuma inexplicably fired the finance minister in December.

“One can only hope that in the shorter term, the market has become a little stretched from all this negativity so far this year and that we get a bit of a relief rally,” Standard Bank trader Warrick Butler said.

In fixed income, the yield for the benchmark government bond maturing in 2026 added 5.5 basis points to 9.74 percent compared to Monday’s close. It was however still far off the previous session’s four-week high of 9.89 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Anand Basu)

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Nigeria to sell 80 billion naira of bonds on Jan 20

11 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

money nigeria

LAGOS (Reuters) – Nigeria said on Monday it will sell 80 billion naira ($402.92 million) worth of bonds  denominated in the local currency at an auction on Jan. 20, its first debt auction of the year, the Debt Management Office (DMO) said.

The debt office said it will issue 40 billion naira each of bonds maturing in 2020 and 2026, using the Dutch auction system.

The 2020 debt is a reopening of a previously issued bond. The 2026 debt is a fresh issue. Results of the auction are expected the next day.

Nigeria has proposed a plan to issue 260 billion to 390 billion naira in 5-, 10- and 20-year naira bonds in the first quarter of the year. [L8N14V1QE]

Nigeria said it will borrow about 900 billion naira locally to finance part of the 2.2 trillion naira deficit in its 2016 budget.

($1 = 198.5500 naira)

 

(Reporting by Oludare Mayowa, editing by Larry King)

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