For decades, every American president has pushed OPEC, the oil oligopoly, to do everything necessary to bring the price of oil down. President George W. Bush, campaigning for the U.S. Presidency, made a strong case that as an oil man, he would help Americans spend less in gas stations. The strategy has been this: push OPEC to pump more, and by doing that boost supply. Of course, from elementary economics, other things being equal, when supply increases, price drops, as new equilibrium points emerge.
But that is changing. Now, America wants OPEC to reduce production. It could be confusing – why would the nation which has castigated OPEC for cutting production volume suddenly wants it to pump less? Why should cheap oil be bad in a period when people are losing jobs? It comes down to third party externalities.
Coronavirus pandemic has decimated demand – that is not news. And if that is the only reason, cheap oil would not be a bad thing. But it goes further. And that’s where President Trump is going. Simply, as oil price drops – “West Texas Intermediate (WTI), the benchmark for U.S. oil, dropped 39.09 per cent to $10.98 a barrel on Monday”, a 21 year low, the president is concerned that the U.S. energy sector could be rattled. Yes, huge distortion in banking and asset quality due to exposures to the sector.
The price of West Texas Intermediate (WTI), the benchmark for U.S. oil, dropped 39.09 per cent to $10.98 a barrel on Monday.
Lack of sufficient demand and storage place is the likely cause of the steep fall in price.
[…]
“It hasn’t taken long for the market to recognise that the Opec+ deal will not, in its present form, be enough to balance oil markets,” BBC quoted Stephen Innes, a chief global market strategist at Axicorp as saying
Nigeria’s benchmark crude oil grade, Bonny Light, slumped significantly earlier last week, trading at $12 and $13 per barrel.
Also, the benchmark used by Europe, and the rest of the world, Brent oil, as at the time of this filing is down 6.55 per cent to $26.24 a barrel.
Already, most U.S. shale gas producers are already out of the breakeven price. Largely, the further the price drops, the more the paralysis is, as most of them would go under. And if they go under, banks which had lent them billions of dollars would have underperforming loans. If you scale that from Texas to Oklahoma, balance sheets of banks would take serious hits. One thing the president does not want now is deteriorating assets in banks’ balance sheets!
Oil prices
So, he has a big job: make sure the price of oil goes up, irrespective of his promises during the campaign to keep it low! This is war and closing the flanks is important.
In the absence of verified vaccines and drugs against Coronavirus, a global pandemic that has infected million of people and killed thousands in the last few months, many discourses have emerged on how to protect the body system against the virus. From medical professionals to academic scholars, people and governments need to be careful on management of the disease.
They have warned and still counselling that people need to be cautious of what they are consuming as defenders against the disease. Governments have been equally chided to intensify efforts on containment of the virus and development of vaccines and drugs as soon as possible. To achieve quick development of the right vaccines and drugs, academic researchers and medical practitioners need support of the governments, businesses and private individuals.
Apart from suggesting that chloroquine can cure the virus, experts have also hinted that Vitamin C and Black Seed Oil could be used to boost immune system against the virus. While making reference to a number of sources, the Physicians of the Orthomolecular Medicine News Service and the International Society for Orthomolecular Medicine recommend “consumption of Vitamin C: 3,000 milligrams (or more) daily, in divided doses, Vitamin D3: 2,000 International Units daily. (Start with 5,000 IU/day for two weeks, then reduce to 2,000) Magnesium: 400 mg daily (in citrate, malate, chelate, or chloride form) Zinc: 20 mg daily Selenium: 100 mcg (micrograms) daily.”
A team of researchers in Algerian Universities, in their latest study, notes that “Nigelledine docked into 6LU7 active site gives energy complex about – 6.29734373 Kcal/mol which is close to the energy score given by chloroquine (-6.2930522 Kcal/mol) and better than energy score given by hydroxychloroquine (-5.57386112 Kcal/mol) and favipiravir (-4.23310471 kcal/mol). Docking into 2GTB active site showed that ?- Hederin gives energy score about-6.50204802 kcal/mol which is better energy score given by chloroquine (-6.20844936 kcal/mol), hydroxychloroquine (- 5.51465893 kcal/mol)) and favipiravir (-4.12183571kcal/mol).” According to them, “Nigellidine and ?- Hederin appeared to have the best potential to act as COVID-19 treatment.”
In what many described as a political voice to the possible treatment and immune boosting, Engineer Seyi Makinde, Oyo State Governor said he recovered from the virus having consumed black seed oil and honey, including Vitamin C and Carrot. This information increased public interest about black seed oil, honey, Vitamin C and Carrot from April 6, 2020 to April 12, 2020.
Exhibit 1: Seyi Makinde and Immune System
Source: Google Trends, 2020; Infoprations Analysis, 2020
During the same month, NOI Poll, a national polling company, found that 72% of sampled 1000 Nigerians aged 18 above who use mobile phone believe that they are not immune against Covid-19 [see Exhibit 2]. Looking at the data across regions, similar result occurred. A significant number of them indicate not immune against the virus [see Exhibit 2]. Considering below and above 500,000 internet subscriptions per month in a state one would expect a significant knowledge seeking about how to boost immune system against the virus. It’s disheartening to know that the interest was much about Coronavirus outbreak in the country than understanding specific needs and issues on boosting immunity against the virus [see Exhibit 3].
Like other professionals and people working on containment of the virus, our analyst asks one of Knowcovid-19’s co-founders, Abdulhakeem Abdulkareem, about how people are using the Internet during this pandemic. Abdulhakeem notes thus:
The coronavirus epidemic has increased people’s presence on Social Media. However, what we noticed is that they use it to reduce boredom. We noticed an increase in the use of TikTok, a social media app where people make a series of videos to create fun and make themselves happy. Poster challenge on WhatsApp, #DontRush challenge, #SomethingNewChallenge, among others are also some of the things that have been trending on Instagram, TikTok and Twitter. However, similar cannot be said about what people are doing to learn more about the pandemic.
Know COVID-19 had an online hangout on Instagram on 16 April 2020 where two public health enthusiasts were invited to speak on the coronavirus and our body immune system. Dr Abdulmussawir Alli-Oluwafuyi of the University of Ilorin emphasised the need to practice personal hygiene and obey all warnings from constituted authorities regarding preventive measures against the virus. He noted that people should ensure to use a face mask, if they can, when going out and maintain social distancing.
Mr Toyyib Abdulkareem of the World Health Organisation, in his contribution, emphasised on the need for the youths to feel the heat and let the frustration out. He maintained that it is normal for them to react to the boredom or frustration caused by the lockdown. He, however, noted that while they practice social distancing, they should not practice emotional distancing –call your friends, your family, and your parents.
The takeaway from the online session is that the best way to prevent and protect against the virus is by limiting our exposure to people and places where it can be contracted. This is the most important immunity against the virus – not getting exposed to it. Therefore, I will encourage people to stay at home and stay safe.
My advice to people is to use the period to improve their personal and mental hygiene. learn more, read more and understand your life better. People should pay more attention to their growth and personal development. They should engage in things that make them happy and find joy in the process of growth and development.
Dangote Group and Apple Corp have one thing in common: both are successful companies in their own domains. Apple is a category-king technology company while Dangote is a preeminent industrial conglomerate in Africa. Apple looks for technology areas with exceedingly huge opportunities. Dangote looks for sectors with untapped opportunities. In most cases, both do not pioneer the sectors, foregoing any first-mover competitive advantage. Rather, Apple and Dangote typically wait for others to move in first, do the initial hard work, and over time, they will plot how to enter, and dislocate the market – and win.
Apple wins most innovation awards because Apple makes great products. But Apple will rarely win any award for bringing new product categories. Before the iPhone, we had Blackberry. Before the iPod, there was the Walkman. Before the Apple Watch, we had Pebble. Indeed, across all domains like payment, music, etc, Apple had always gone to improve what was already in existence. Largely, they watch the incumbents, learn from their mistakes, and then go and build better products. And when the customers see their products, which typically deliver better value, across metrics, the incumbents will begin to experience loss of market share.
Dangote follows the same playbook in Nigeria. Once it discovers a sector that is generating good margins and nice cashflow, it quickly comes in. The playbooks from cement to fertilizer to agro-processing have been consistent on that construct. Dangote will not enter into ecommerce today because there is nothing there. But once there is life therein, expect the conglomerate to pay attention. With thousands of trucks, it can play a double play strategy on nationwide distribution.
For Dangote and Apple, winning markets comes with one clear business construct: unleashing accumulated capabilities with asymmetric resources and execution firepower via technology, financing, distribution, supply chain, human capital, etc that incumbents cannot match. Indeed, by the time pioneers in smartwatch saw Apple’s interest in the category, they gave up because Apple brought in a new basis of competition that is totally orthogonal for them to confront. Dangote does the same thing, and most times wins.
The lesson here is simple: first mover advantage is great, but operating a sustainable business with capacities to build competitive moats to protect castles is even more important.
Nigeria’s equity market is off to an early gain, currently up by 0.36%. FTSE (UK) – down by 1.18%, DAX (Germany) – down by 1.42%, CAC 40 (France) – down by 1.48% and Nikkei 25 (Japan) – down by 1.15%.
Click on the link https://bit.ly/2XrvIf9 to open a stockbroking/share purchase account and trade within 24 hours.
Oil Market Update:
Following our series of update on events in the global oil market and Nigeria’s Bonny Light, the real spot price of Nigeria’s Bonny Light may have now hit $12-13 according to a report by Bloomberg.
The current futures price of Bonny Light is $22.32 after gaining close to 5% over the weekend. Typically, it’s futures price of oil that’s quoted for reporting because that’s usually the price at which agreed oil supplies are executed. Futures price is a strategy used in oil-storage trade. The premium between the futures price and spot price on Bonny Light is expected at this time since Nigeria is struggling with storage among other challenges.
We will address in details the difference between these two prices in subsequent updates.
Money Market Update:
Our money market fund is still open and yield is currently over 11.5%, reach out to our team to grow your cash. We are digital, we are working from home, we are online and we are active. You can also do deposits with us at a starting rate of 10%.
Click to subscribe to our money market fund https://trustbancasset.com/moneymarket/
Headlines and Corporate Disclosures:
BREAKING: NCDC Confirms 86 New Cases Of COVID-19 In Nigeria
Eighty-six new cases of COVID-19 have been confirmed by the Nigeria Centre for Disease Control (NCDC), taking Nigeria’s total infections to 627. The NCDC confirmed this late on Sunday via a statement on Twitter. According to the agency, of the 86 new cases, seventy were in Lagos, seven in FCT, three in Katsina, three in Akwa Ibom, one in Jigawa, one in Bauchi and one in Borno. Read more
Latest on the spread of the coronavirus around the world
Reported cases of the coronavirus have crossed 2.38 million globally and 164,918 people have died, according to a Reuters tally as of 0200 GMT on Monday. Read more
Nigeria, others need $114bn to fight COVID-19, says IMF
Nigeria and other African countries need an estimated $114bn to fund the campaign against the outbreak of the coronavirus disease on the continent. This was disclosed in a statement posted on the website of the International Monetary Fund on Sunday. The fund is meant to provide the front-line health services, support the poor and vulnerable, and keep economies afloat in the face of the worst global economic downturn since the 1930s. Read more
Petrol subsidy removal, a game-changer — LCCI
The Lagos Chamber of Commerce and Industry has said the decision by the Nigerian National Petroleum Corporation to put an end to fuel subsidy will be a game-changer for the oil and gas sector and the economy. The Director-General, LCCI, Dr Muda Yusuf, said in a statement on Sunday that the impact on the economy would be invaluable. Read more
Dollar firm as caution creeps back; kiwi jumps as lockdown to ease
The dollar found support on Monday as global growth fears hit oil prices and commodity currencies, while the New Zealand dollar rose on news that the government will begin to relax strict virus containment measures from next week. Read more
U.S. oil off lows after falling over 20% to levels unseen since 1999
Crude oil futures fell on Monday, with U.S. futures dropping more than 10% to levels unseen since 1999 amid concerns that U.S. storage facilities will soon be brimful with demand evaporating due to the coronavirus pandemic. The volume of oil held in U.S. storage, especially at Cushing, Oklahoma, the delivery point for the U.S. West Texas Intermediate (WTI) contract, is rising as refiners throttle back activity due to slumping demand. Read more
Asia shares turn cautious before earnings, U.S. crude crushed
Caution gripped Asian share markets on Monday amid expectations a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdowns, while a glut of supply sent U.S. crude spiraling to 20-year lows. Read more.
China’s fiscal revenue plunges 26.1% as virus ravages economy
China’s fiscal revenue tumbled 26.1% in March from a year earlier, officials said on Monday, extending the previous month’s slump as the coronavirus pandemic ravaged the economy. Fiscal revenues fell 14.3% in the first quarter from a year earlier to 4.598 trillion yuan ($649.75 billion), Liu Jinyun, an official at the finance ministry said, attributing the decline to the coronavirus outbreak and tax relief offered. He expected the revenue to fall in the second quarter. Read more
With economy in crisis, U.S. lets importers delay some tariff payments
The Trump administration on Sunday said it would allow importers hit by the national health crisis to defer for three months any tariff payments they owe the government. The measure aims to help businesses hit by the coronavirus pandemic, which has put millions of Americans out of work and is widely seen pushing the economy into a deep recession. Read more
UK not thinking of easing virus lockdown measures yet: minister
Britain is not considering lifting its lockdown imposed almost four weeks ago to control the coronavirus outbreak given “deeply worrying” increases in the death toll, a senior minister said on Sunday. Britain is at or near the peak of a health crisis in which more than 15,000 people have died – the fifth highest national death toll of a pandemic linked to at least 150,000 deaths worldwide. Read more
Veritas Kapital Assurance Plc – Notice of Board Meeting and Closed Period for 2020 Q1 Accounts
Notice is hereby given that a virtual meeting of the Board of Directors of Veritas Kapital Assurance Plc (the Company) will be held on Thursday, April 23, 2020 by 10:00 a.m. to consider and approve the Quarter 1 2020 unaudited financial Statements. Read more
Corporate Disclosures:
UAC of Nigeria Plc Audited Financial Statements for the Period ended 31 December 2019- see details
Unilever Nigeria Plc Unaudited Interim Financial Statements For the Three Months ended 31 March 2020- See details
Notes: No webinar on Saturday; we have many contents this week to go through. But if you have any question on any content, email Admin. The State of the Tech Nation, Emerging Opportunities and Innovation Lessons This week, we are focusing on emerging opportunities, the state of the technology world, and innovation lessons from African […]
