Nigeria’s oil production and 2017 budget implementation could be hampered by the lull in global oil market, as crude price dropped to around $40 per barrel. Global benchmark crude, Brent, has remained below $47 per barrel this week, while OPEC daily basket price stood at $43.14 a barrel on Wednesday.
Nigerian crude grades are under pressure with several unsold cargoes yearning for buyers. To underscore the market oversupply, traders said currently there were as many as 30 cargoes available for June and July loadings, in addition to the newly released August loading programmes, which are about 67 cargoes. If the remains low for a long a time, it will certainly hamper effective implementation of this year’s budget, which is hinged on oil benchmark of $44.5 per barrel.
Furthermore, traders said Nigeria’s largest crude Qua Iboe was valued at less than dated Brent plus 40 cents from Wednesday, the weakest price assessment since late 2015, Reuters reported. Supply is plentiful, Nigerian exports are set to reach a 17-month high in August, and traders said there are 20 cargoes for loading in July and another 10 for June loading still available, the report added.
Records showed that Brent price was $46.91 per barrel on Monday, on Tuesday it dropped to $46.02 and to $44.82 on Wednesday but yesterday it went up $45.14 per barrel after slumping to 10-month lows on concerns of a glut in the market. However, concerns about the outlook remain and they weighed on a number of oil stocks across the world.
The global oversupply theme has been driving the market lower, despite the OPEC and non-OPEC supply cut to boost price. OPEC and non-OPEC countries had agreement to curb supply by 1.8 million bpd by a further nine months after its recent meeting in Vienna but rising supply in the U.S., Nigeria and Libya, in addition to signs of demand decline in Asia, which is the biggest oil-consuming region in the world, have been weighing on crude prices.