Coronation Research issues 2020 Economic Outlook for Nigeria
Re-risking the financial system
Oil prices: In a global oil market threatened with over-supply, it appears that OPEC, and its ally Russia, are doing a good job of limiting production. Oil price volatility was reduced in 2019 and prices (Brent) held up above US$60.00/bbl most of the time. With further OPEC cuts announced last December, we think 2020 may well be a repeat performance. The current futures curve supports this view. We look for oil to average at least US$60.00/bbl this year.
Due to oil’s role in a) supplying US dollars to the Central Bank of Nigeria (CBN), and b) inspiring confidence in Nigerian markets generally, this outlook forms an integral part of our foreign exchange and interest rate view. We believe that oil prices below US$50.00/bbl, for example, could challenge foreign exchange and interest rate management.
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