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Oil prices dip further ahead of Fed’s meeting

The US Fed is set to meet today, and analysts expect another 25bps increase in interest rates to the 5%-5.25% range. This consensus is hinged on the recent uptick in the US core inflation to 5.6% in March from 5.5% in February and an increase in wage costs to 1.2% in Q1’23 from 1.1% in Q4’22.

Powell is determined to drive inflation towards the Fed’s target of 2%, and the recent rise in underlying inflation strengthens their position for further rate hikes, albeit less aggressively.

The expected increase in interest rates and the likelihood of the US economy overheating on slower output growth, together with China’s purchasing managers’ index (PMI) slowing to 49.2 points in April, erupted bearish sentiments in the oil markets. Consequently, oil prices fell further below the $80pb benchmark to $79.25pb today.

Strong palm oil demand to increase domestic production by 7%

According to the US Agriculture Department, Nigeria’s palm oil production is expected to climb by 7% to 1.5 million metric tonnes in the October 2023/September 2024 financial year. This is because farmers plan to take advantage of the elevated domestic palm oil price and its increasing demand.

In 2022, Nigerian palm oil producers recorded revenue growth of 68% to ₦142.31 billion from ₦84.82 billion in 2021, reducing palm oil imports by 5.9%.

These and other burning economic issues were discussed on the Business Morning programme on Channels TV yesterday.

Enjoy your read!