Economy

Oil price increases following inventory decline

Crude oil prices rose after the Energy Information Administration (EIA) reported a crude oil inventory decline of 3.1 million barrels for the week to December 11.

Following the report on Wednesday, West Texas Intermediate (WTI) settled at $47.79 while Brent crude rose to $51.05. Bonny light also stood at $50.45.

The report came out a day after the American Petroleum Institute (API) estimated inventory builds across crude and fuels, pressuring prices just as they had started to improve again.

The increase in oil prices is good news for Nigeria as President Muhammadu Buhari had on October 8, 2020, proposed aggregate revenue and expenditure budgets for 2021 at N 7.89 trillion and N13.08 trillion, respectively.

The proposed budget estimates a daily oil production estimate of 1.86 million barrels per day (BPD) (inclusive of condensates of 300,000 to 400,000 BPD), about three percent increase over the revised 2020 budget.

The estimated benchmark oil price of S$40 per barrel was fixed at a conservative and realistic price following the current fluctuations of oil prices (within S$39 – S$43 per barrel).

Adewale Nurudeen

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