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Buy on the Nigeria rumour, sell on the Niger fact

February 19, 2010

OilNigeriaConfusion over the names of two similar-sounding African countries may have helped boosted oil prices to near $80 a barrel this week as traders rushed to buy oil after reports of a military coup.

A Reuters reporter received a flustered phone call from a hedge fund partner who had heard animated discussion in the market about an incident in Nigeria, only to realise that traders had muddled up Africa’s biggest oil producer with its neighbour Niger.

“Markets took off at around the same time a Reuters story came out about gunfire erupting in the Niger capital in an apparent coup bid, mistaken by many as being Nigeria,” said Tom Bentz, analyst at BNP Paribas Commodities.

Reuters first broke news of heavy gunfire and a coup in Niger’s capital, Niamey, on Thursday. Prices jumped to a one-month high of $79.29 a barrel during the day.

While a coup in Nigeria would almost certainly rock crude oil benchmarks, a coup in Niger  — which has yet to produce oil — would almost certainly not, barring linguistic confusion.

Traders said that an oil market version of the game “Chinese whispers” rather than poor geography may have been behind the jump, as some scrambled to call the market amid mounting confusion over the titles of the two countries which share the same first five letters. The fact that Nigeria’s main oil producing region is called the Niger Delta and is an area of political unrest probably also stoked the rumours. A popular trading mantra is “buy the rumour, sell the fact”.

But far from being a costly mistake, the decision to buy oil on the Niger coup was a flash of fortuitous genius for some as oil prices continued rising afterwards to within cents of $80 a barrel on Thursday, spurred by other factors such as tension over Iran’s nuclear programme and a weaker dollar.

Comments

Thats just Hilairious. Niger becomes the Niger Delta becomes Nigeria and You make your Coin on a False Belief.
I have found in Trading that Lady Luck is a very Cruel Mistress and it is far better to know your Niger from from Naija from your Nigeria.

Aly-Khan Satchu
http://www.rich.co.ke

Posted by AlyKhanSatchu | Report as abusive
 

For more in-depth news about Africa, you may want to visit Newstime Africa http;//www.newstimeafrica.com – We cover the whole of Africa

Posted by Newstime | Report as abusive
 

I wonder why anyone would be surprised to read this. When it comes to reporting about Africa reporters write anything. Africa is one big village where people perpetually fight over a dry well. Stories like this may make your readers laugh at what they think is the calamity of the people they thing they are better than, but the fact is that these reporters have no soul. There will be no coup in Nigeria! So find pleasure in some other way. Africa will make it!

Posted by gabrielo | Report as abusive
 

This confirms our belief that all investors interested in Africa should read or subscribe to analysis.

B&M Consulting is the first political risk consultancy focused exclusively on Africa.
http://www.bmconsultancy.net

Posted by africarisk | Report as abusive
 

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