Being an Analyst Note issued by Proshare Research on November 15th , 2022 

OPEC MOMR: Nigeria's Crude Oil Production Rebound above 1mb/d

The Organization of Petroleum Exporting Countries (OPEC) Monthly Oil Market Report (MOMR) for November 2022 shows that crude oil production increased mainly in Nigeria and Iraq among the thirteen OPEC members. Nigeria's oil production based on direct communication increased by 77,000 barrels per day (b/d) M-o-M from 937,766b/d in September 2022 to 1.014mb/d. Similarly, the country's crude oil production increased by 33,000b/d M-o-M from 1.025mb/d in September 2022 to 1.057mb/d in October 2022, based on secondary sources. 

Meanwhile, the country's rig count (a metric for drilling activities in the upstream sector) rose from seven units in September to eight in October 2022. Proshare analysts attributed the increase to Shell's resumption of crude oil export from Bonny and Forcados terminals, where output increased significantly and to the supposed decline in crude oil theft due to the surveillance projects by the NNPC Limited and its security services partners. With the recorded increase in rig count and the continuous surveillance of the country's oil infrastructure, analysts expect production to increase for the rest of the year (see chart 1 below). 

Chart 1: 

OPEC Releases its Oil Demand Forecast

On Monday, OPEC cut its global oil demand growth forecast for 2022 and 2023 for the fifth time in eight months on mounting economic challenges, including high inflation, rising interest rates, high sovereign debt, tight labour markets, and supply chain constraints. The organization trimmed demand growth for both years by 100,000b/d. It expects demand to grow by 2.55mb/d to an average of 99.6mb/d in 2022 and by 2.24mb/d to an average of 101.8mb/d in 2023. While Analysts see downside risks in covid-19 restrictions in China and the looming global recession, moderating inflation in some economies and the likely resolution of the geopolitical tension in Eastern Europe may portend some optimism.   

Malaysia Warns of Uncertainty in Global Palm Oil Market in 2023.

Malaysia's palm oil board warned that 2023 would be challenging for the oil market, which has battled volatility triggered by recession fears, the war in Ukraine, shifts in weather patterns, and the labour situation. In the near term, disruptions to palm oil supplies because of tropical storms in top producers are expected to continue into Q1 2023, further backing the upward drive of oil prices. With Indonesia's plan to replant their oil palm trees for three years, which caused the export of old stock of oil palm, oil prices dropped this year as a near-term effect. The monsoon season is picking up in Malaysia and has triggered flooding across the country. This replanting plan and the problems these countries face would see oil palm prices rebound in 2023.

November 2022 Bond Issuance Oversubscribed by 20%

Reversing the low subscription seen in the past months, yesterday's primary auction had an oversubscription of 20% at N269bn worth of notes as against the N225bn offered. The oversubscription was majorly at the 2037 tenor, while the 2029 and 2032 had a low subscription of N39.45bn and 34.82bn, respectively. The rates on 2029, 2032, and 2037 maturities rose by 25bps, 20bps, and 20bps to settle at 14.75%, 15.20%, and 16.20%, respectively. The adjustment in rates should initiate buying interest in the bond market today (see table 1 below). 

 Table 1: 

Amazon to Lay Off Thousands of Employees 

Amazon plans to lay off its workforce just like other big tech companies, which will affect 10,000 0f its employees in its corporate and technology jobs. The cuts will focus on Amazon's devices organization, including the voice-assistant Alexa, as well as at its retail division and in human resources. Amazon reported 798,000 employees at the end of 2019 but had 1.6m full- and part-time employees as of December 31, 2021, a 102% increase. The report came after the e-commerce giant warned of a slowdown in growth for the busy holiday season, a period when it used to generate the highest sales. Analysts believe that as the global economy gets tougher, layoffs will extend till the first quarter of 2023. High costs, inflation, overinvestment for expansion, and so on are a few reasons for Amazon's mounting losses. 

Nestcoin to Lay off Workers after a Big Down Crash to FTX

One of the Nigerian crypto start-ups, Nestcoin, lost some of its assets due to the FTX collapse. FTX is the second-largest cryptocurrency exchange in the world. This raised some concerns as Nestcoin decided to lay off some of its staff in other to strategize and produce new techniques to keep the business going. Nestcoin also stressed that the incident has no impact on its customers' finances, adding that the products Nestcoin has released to date are Defi protocols & non-custodial. As such, it has never held customer funds. The company said it stored a sizeable proportion of its stablecoin investment on the FTX Exchange, and its hope of recovering them is now hanging in the balance.  However, Analysts expect a call back when the FTX issue has been resolved and users are permitted to make transactions on the website. The global cryptocurrency market reacted bullishly in the last 24hrs with a good fight back, bringing the market cap to US$885bn, a 3.3% change to what we had yesterday (see chart 2 below). 

Chart 2: