Oil falls below new budget benchmark

David Mark and Aminu Tambuwal

The price of global benchmark Brent crude oil fell about three per cent on Monday to a six-week low of $52.50 per barrel, less than a week after the National Assembly adopted $53 per barrel as the 2015 budget oil price benchmark.

Oil prices dropped by more than 60 per cent between June 2014 and January 2015, but have recently shown signs of stabilising.

Brent crude, against which Nigeria’s oil is priced, bounced back from six-year lows to around $60 per barrel in January, while the United States’ benchmark West Texas Intermediate fluctuated around the $50 mark.

Last week, the Senate and the House of Representatives settled for $53 as the crude oil benchmark price for this year’s budget, down from $65 proposed by the Executive.

The sharp decline in oil prices had last year forced the government to adjust the benchmark price for the 2015 budget twice from $78 to $73, and later to $65.

Brent, which fell below $53 per barrel early on Monday, later rose to $53.55 in the evening.

The WTI, which tumbled to a March 2009 low of $42.85 per barrel, also rebounded to $43.36.

Brent and the United States crude have fallen over the last two weeks on renewed fears of an oil glut, after February’s rebound from a 60 per cent price drop in seven earlier months.

The International Energy Agency had last Friday warned that another sharp fall in oil prices was likely despite the recent rebound.