Nigeria’s light sweet crude sells below $39 per barrel

EIA lists reasons for price volatility

NIGERIA’S light, sweet crude futures for delivery in October dropped below $39 a barrel on the New York Mercantile Exchange on Monday, representing a 5.66 per cent decrease.

This represents $13 reduction from the $52 crude oil benchmark approved by the Federal Government for 2015 budget.

Nigeria also produce Light Sweet Crude Oil, which is the world’s most actively traded energy product. It plays an important role in managing risk in the energy sector worldwide.

October Brent crude was also down by 5.61per cent on London’s ICE Futures exchange to $43.70 a barrel, dropping below the $45-a-barrel mark for the first time since March 2009.

Giving reasons for the continuous fall in crude oil prices, The United States’ Energy Information Administration (IEA), said that the continued growth in global production of petroleum and other liquids has outpaced consumption growth since August 2014, resulting in rising global liquids stocks.

According to EIA, these strong inventory builds have put significant downward pressure on near-term crude oil prices: North Sea Brent crude oil spot prices have averaged $58/barrel through July of this year compared to $109 per barrel over the same period in 2014, responding to growth in global inventories.

It stated that total global liquids inventories are estimated to have grown by 2.3 million barrels per day (bpd) through the first seven months of 2015, the highest level of inventory builds through July of any year since 1998.

EIA estimates global consumption of petroleum and other liquids grew by 1.1 million bpd in 2014, averaging 92.4 million bpd for the year. ‘‘Through July 2015, global liquids consumption has grown by an additional 1.2 million b/d. Global production of petroleum and other liquids has been higher, growing by 2.3 million bpd in 2014, averaging 93.3 million b/d for the year, and increasing by an estimated additional 2.9 million b/d through July 2015.

‘‘Although the annual increases in global crude oil and liquids production have been similar, the sources of supply have been different. In 2014, most global liquids production growth was from countries outside of the Organization of the Petroleum Exporting Countries (OPEC), particularly the United States, while production from OPEC actually fell. In contrast, growth thus far in 2015 has come from both OPEC and non-OPEC countries. Through the first seven months, EIA estimates that non-OPEC petroleum and other liquids production has grown by an average of 2.0 million b/d, while OPEC liquids production is estimated to have grown by 0.9 million b/d over the same period.