There are indications that the oil industry of the United States of America, USA, is now capitalizing on the recent upsurge in oil prices to pump-up volume in the market, leading to excess supply glut and slump in prices.
Consequently, after hitting a five year high of $80 per barrel last month, oil prices slipped, yesterday to $75.68 per barrel occasioned by rising supplies in the United States and expectations that producers could relax voluntary output cuts.
This development may be threatening the current expectations on oil revenue for Nigeria’s 2018 fiscal plan which propelled the National Assembly to revise the oil price benchmark for 2018 budget as well as the expected revenue and expenditure.
In its latest report released yesterday, OPEC said, however, that world oil demand growth in 2017, as projected by the Organisation remained unchanged at 1.65 mb/d, averaging 97.20 mb/d for the rest of this year.
It also kept oil demand growth unchanged in 2018 despite some offsetting revisions in both Organisation for Economic Co-operation and Development, OECD, and non-OECD countries.
The report noted that “OECD consumption is forecast to grow by 0.40 mb/d in 2018, some 0.02 mb/d higher than in the previous year, following positive revisions in OECD Americas. Meanwhile, oil demand in the non-OECD is now projected to grow by 1.27 mb/d, showing a downward revision of 0.02 mb/d from last month’s assessment.
Oil price report released yesterday by OPEC showed that Brent crude was down 20 cents at $75.68 a barrel, as U.S. light crude was 35 cents lower at $66.01.
Prices were weighed down by another rise in the number of rigs drilling for new oil production in the United States.
This implies that U.S. crude output, which is already at a record-high of 10.8 million barrels per day (bpd), will also rise further, according to energy services firm Baker Hughes.