By Udeme Akpan with Agency Report
THE price of Bonny Light, Nigeria’s premium crude oil grade, Wednesday, dropped to $71.24 per barrel from $72 recorded the previous day, over fears of increasing United States stock and the spread of Delta variant.
The price of Bonny Light and other crudes had risen to over $75 per barrel in July 2021, due mainly to improved vaccination during the period.
But the current slide would not affect the execution of Nigeria’s 2021 budget, which was benchmarked on $57 per barrel and 1.8 million barrels per day, (excluding Condensate), as the nation also produces between 300,000 – 400,000 of Condensate daily.
However, Reuters, which noted the availability of commercial stock in the US, stated: “Oil prices fell for the third day in a row to a two-week low on Wednesday on a surprise build in U.S. crude stockpiles, negative U.S. economic reports and worries the spread of the coronavirus Delta variant will weigh on global energy demand.
“Traders noted the oil price drop came despite reports of increased Mideast geopolitical tensions.
“The U.S. Energy Information Administration (EIA) said crude stockpiles rose by an unexpected 3.6 million barrels last week, while gasoline inventories fell by a bigger-than-forecast 5.3 million barrels.”
It added: “Coronavirus cases worldwide surpassed 200 million on Wednesday, according to a Reuters tally, as the more-infectious Delta variant threatens areas with low vaccination rates and strains healthcare systems.
“The United States and China, the world’s two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts anticipate will limit fuel demand at a time when it traditionally rises in both countries.”
Nevertheless, in its July Oil Market Report, the Organisation of Petroleum Exporting Countries, OPEC, had stated: “The global economic growth forecast for 2021 remains unchanged at 5.5 per cent.
In an initial assessment, global economic growth for 2022 is forecast at 4.1 per cent. However, future global growth continues to be impacted by uncertainties, including the spread of COVID-19 variants and the pace of the global vaccine rollout.
“In addition, sovereign debt levels in many regions, together with inflationary pressures and central bank responses, remain key factors that require close monitoring. Nevertheless, upside potential could materialize as ongoing containment COVID-19 measures in combination with additional fiscal and monetary stimulus could turn out to be more effective than envisaged, leading to further gains in consumption and investments.”