Markets

Nigeria's budget not threatened as oil prices crashes to $65

Nigeria's budget not threatened as oil prices crashes to $65

"This is more a timely correction".

Billionaire investor Cooperman says United States crude will soon hit $70 per barrel.

The oil price hit its lowest point this year and American inventories were higher last week. Both figures are up 3.1 percent.

The market is nervous as it watches the upward trend of United States production.

A preliminary poll by Reuters on Tuesday showed analysts expected weekly data to show U.S. crude inventories last week rose 3.2 million barrels.

The nation's previous high crude output was in November 1970 when it averaged just above 10.04 million bpd, according to the EIA.

The US has also hinted it might sell off half of its emergency reserves to help raise money, a move critics question as unwise, given the energy security role of the emergency reserves. In December 2016 was a meeting of oil producers outside the OPEC.

"Clearly it's given us a lot more opportunity to swagger", Carolyn Kissane, Ph.D, academic director, at NYU, SPS Center for Global Affairs said. The report forced market participants to continue selling, sending quotes at 1.5-month minimums.

Since the start of the Opec-led supply cuts in January 2017, oil prices have risen by 20 per cent, though prices in February have come under pressure again in large part due to soaring USA output.

The costs of labor and contracted services have recently risen sharply in the most active oilfields; drillable land prices have soared; and some shale financiers are calling on producers to focus on improving short-term returns rather than expanding drilling.

Falling commodity prices may also be attributed to a stronger dollar, as it deters buying interest and makes it more expensive for holders of other currencies.

Chinese consumption of oil meanwhile is rising, as reflected by the surge to a record 9.57 million bpd in imports in January, according to official customs data.

The agency forecast USA crude oil output will rise by 1.26 million bpd to 10.59 million bpd in 2018. Although it exports more than two million barrels a day, the Middle Eastern country typically imports extra-light condensate to process in a unit known as a splitter.

Crude inventories rose by 6.8 million barrels in the last week, compared with analysts' expectations for an increase of 126,000 barrels.

While US inventories have fallen significantly, OPEC believes there's still a considerable overhang in other regional stocks that needs to be corrected.

The next meeting of the OPEC + countries will be held on June 22 in Vienna. Adding to the alarm was data that showed U.S. oil production at a new high, and key technical indicators pointing to a further retreat in prices.

Venezuela President Nicolas Maduro has called on his OPEC counterparts to join him for the creation of a common cryptocurrency mechanism for the oil cartel.

Production cuts by OPEC.

The remarkable comeback of US crude production earned yet more press on Wednesday with the disclosure from that country's Energy Information Agency that America will export more energy products than it imports by 2022, a status it hasn't achieved since 1953 and wasn't expected to achieve until 2026.


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