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Oil prices rally to a month high.

Oil prices rose to $86.31pb on deeper supply concerns over Russia’s ban on its oil exports. In the near term, we expect oil prices to remain bullish, driven by improved demand prospects in China, a major importer. This would bolster export earnings as well as fiscal revenue, aiding external reserve accretion and stabilizing the naira in the parallel market.

On the other hand, LNG prices plunged 10.63% to $2.69 due to high gas inventories in Europe and are currently 72.21% below their peak of $9.68 in 2022. We expect LNG prices to remain low as the United States continues to build its gas inventories and forecast of milder weather in Europe persist.

Domestic tomato prices surged by 90% in one year

The price of a 50kg bag of tomato in the country has risen to N19,000 from N10,000 a year ago. Recently, there have been news reports regarding the approval of the importation of the commodity which is expected to weigh on tomato prices in the near future. However, in the short term we expect tomato prices to remain elevated due to increased rainfalls which raise the risk of post-harvest losses and could further tighten supply.

Naira appreciates despite election uncertainties

The naira appreciated by 1.19% to N754/$ in the parallel market, compared to its close of N765/$ on February 27. The appreciation of the naira could be attributed to the correction in the Treasury bill rate in the past two weeks. After falling to 2.24%p.a. in mid-February from a high of 14.8%p.a. in November 2022, the TB rate rose to 9.9%p.a. (364 days). This could bolster the inflow of dollar-denominated assets. An increase in the inflow of dollars coupled with suppressed demand for the dollar could ease the pressure on the naira in the near term and stabilize the exchange rate of the naira.

The download and link below gives a snapshot of the discussion in the commodities segment of the Business Morning Programme on Channels TV.

Enjoy your read!