Nigeria‘s economic recovery looks up as oil price reaches below $56 per barrel
by Olusola Bello with agency report
September 20, 2017 | 7:05 pm| | | Start Conversation
Brent, the equivalent of the Nigerian‘s Bonny crude and West Texas Intermediate (WTI) drop to $55.42 on Wednesday after hitting fresh highs of $56 in early trading on Tuesday with oil demand looking particularly robust and fears over hurricane damage to the market having receded.
Experts have predicted that the price of crude could reach $60 per barrels but doubt if it would ever go beyond that
This is no doubt a big boost to Nigeria, a country whose economy depends solely on crude oil as major source of foreign exchange earnings. The budget bench mark was put at $44.5 per barrels.
The country recent exit from the recession has been a as a result of steady rise in the price of the commodity and cessation of hostilities from the Niger Delta militants that have stopped breaking pipelines and allow the crude production to grow steadily.
Currently, she produces on the average of 1.8 million barrels of crude and about 500,000 barrels of condensates thereby making the total oil production to hit 2.3 million barrels per day.
Her external reserve hit s about $33 billion last month’s no thanks to the uninterrupted crude oil production for that period.
Meanwhile some OPEC members are still contemplating a further cut in production in order to firm up the price of the commodity and also clear a global glut, led partly by U.S. shale production .
Iraq and some other oil producers taking part in global output cuts think they should reduce supply by an additional 1 percent to help re-balance the market, according to Iraqi Oil Minister Jabbar al-Luaibi. Some also favour extending cuts until the end of 2018, he said.
Producers are talking about what to do next regarding the cuts, al-Luaibi said at a conference in the emirate of Fujairah in the United Arab Emirates. There is “no firm decision yet” on further cuts or any extension of the current reductions, he said.
“Some think that cuts should be extended beyond March, three or four months, or six months, or maybe till the end of 2018,” al-Luaibi said. “Some, like Ecuador and other countries, even Iraq, think there should be another cut of 1 percent.”
The Organization of Petroleum Exporting Countries and major suppliers including Russia agreed to trim output by 1.8 million barrels to clear a global glut, led partly by U.S. shale production. They extended their accord through the first quarter, and ministers from Saudi Arabia, Venezuela, the United Arab Emirates and Russia have said producers may consider prolonging the cuts further. Benchmark Brent crude has slid about 2 percent this year and is currently trading at less than $56 a barrel.
OPEC’s decreases in output “are going OK,” while non-OPEC compliance with the targets is less than that of the group, though this is to be expected, al-Luaibi said. Oil prices and the global market are improving, and Iraq sees a “positive trend” in crude markets, he said. Oil demand will continue to increase in the coming two to three years, he said.
Iraq,OPEC’s second-biggest producer, is exceeding its targeted reduction of 210,000 barrels a day by cutting 270,000 barrels a day, al-Luaibi said. Iraq is now pumping 4.32 million or 4.35 million barrels a day, he said. Before the cuts started in January, the country was pumping 4.565 million barrels a day, he said.
However Nigeria and Libya, which have both boosted oil production since they were exempt from global cuts this year, may be asked to cap their crude output soon in an effort to help re-balance the market.
OPEC and non-OPEC producers have invited the two African nations to their committee meeting holding next week to discuss the stability of their production.
The will invited them to discuss the situation of their production. If they are able to stabilize their production at current levels, they would be asked to cap as soon as possible.
Crude sank into bear territory in recent time amid concerns the cutbacks by producers of the Organization of Petroleum Exporting Countries, Russia and other allies are being partially offset by a rebound in supply by Libya, Nigeria and U.S. shale output. Libya and Nigeria were both exempt from the cuts due to their internal strife.
The two countries came into focus after they seemed to resolve some of the political challenges that had slashed their production. Libya’s oil output has climbed to more than 1 million barrels a day for the first time in four years. Nigeria’s production rose 50,000 barrels a day in June, according to a Bloomberg survey.
“Capping Libya and Nigeria might help but won’t cut the supply by much,” Abdulsamad Al-Awadhi, a London-based analyst and Kuwait’s former representative to OPEC, said recently. “OPEC needs to have better compliance, and it must respect the right of Libya and Nigeria to go back to the market. Other countries that raised output while Libya and Nigeria are out should do more and give space to these two countries to go back to the market.”
Olusola Bello with agency report
by Olusola Bello with agency report
September 20, 2017 | 7:05 pm12893 | 93 | 0 | Start Conversation
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