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Breakfast Report - 06 May, 2019

The Week Ahead                                                       

According to the Energy Information Administration (EIA), average imports of Bonny Light Crude by the United States’ fell to 112,000 barrels per day (bpd) in April from 190,500 bpd in January. This represents a four-year low for U.S. imports of Nigerian oil. Imports of Nigerian crude has been on the decline, falling 43% from 300,690 bpd in 2017, to 186,000 bpd in 2018. Due to an increase in shale production in the U.S., there has been a fall in demand for Nigerian crude by the U.S. Washington’s oil exports averaged 1.9 million bpd in 2018 (EIA), and for the first time since shipments of American crude began in 2015, crude oil exports to the United Kingdom exceeded supplies from other nations, including Nigeria. With crude importation by the U.S. likely to decline further as Shale mining ramps up, Nigerian crude sales are likely to shift towards eastern markets.                      

Equity: We expect a mixed trading pattern today and a positive bias, as investors look out for bargains on already beaten down stocks. We foresee activity levels remaining average in the absence of any catalyst to alter the trend.                                                           

Stock Watch: Following a 136% rally in 12 sessions, DANGFLOUR dipped 976bps on Friday to settle at ₦17.10 as investors took profit on the significant gains in the stock. News of Olam International's acquisition of the company owned by Africa's richest businessman overshadowed the average Q1'19 earnings results. The stock traded with a 0.02x bid/offer ratio (₦0.05 spread) at the end of the session.                                                

Fixed Income: Supported by healthy system liquidity, we expect yields to further moderate in the T-bills market today. Meanwhile, with investor interest still weak in the bond space, we expect trading to be mixed.