By Adedapo Adesanya
These are not the best of times for Nigeria as funding its 2024 budget is getting tougher as a result of the sharp decline in the price of crude oil in the global market.
On Tuesday, the price of the Brent crude shrank by $2.65 or 3.69 per cent to its lowest level since December 2021 at $69.19 per barrel, far below the $77 per barrel benchmark set in the 2024 Appropriation Act.
Equally, the US West Texas Intermediate (WTI) crude lost $2.96 or 4.31 per cent to trade at $65.75 a barrel after the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) revised downward its demand forecast for this year and 2025.
An OPEC monthly report yesterday said world oil demand would rise by 2.03 million barrels per day in 2024, down from last month’s forecast for growth of 2.11 million barrels per day.
Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.
According to the cartel, world oil demand will rise by 2.03 million barrels per day in 2024, down from growth of 2.11 million barrels per day expected last month.
China accounted for the bulk of the latest downgrade, as OPEC trimmed its forecast of Chinese growth to 650,000 barrels per day in 2024 from 700,000 barrels per day.
Oil use in the world’s second largest economy was facing headwinds from economic challenges and moves to cleaner fuels, OPEC said.
The group said this year’s demand growth was still above the historical average of 1.4 million barrels per day seen prior to the COVID-19 pandemic in 2019, which caused a plunge in oil use.
For next year, OPEC cut its 2025 global oil demand growth estimate to 1.74 million barrels per day from 1.78 million barrels per day.
On its part, the US Energy Information Administration (EIA) on Tuesday said global oil demand is set to grow to a bigger record this year while output growth will be smaller than prior forecasts.
Global oil demand is expected to average around 103.1 million barrels per day this year, the EIA said, some 200,000 barrels per day higher than its previous forecast of 102.9 million barrels per day.
Asian refiners’ margins fell to their lowest seasonal level since 2020 last week on rising supplies of diesel and petrol, a development that overshadowed data which showed China’s exports grew in August at their fastest in over one year as local demand weakened imports.
The market continued to watch as Tropical Storm Francine barrelled across the Gulf of Mexico driving operators to shut in around a quarter of offshore crude production.
Crude oil inventories in the US fell by another 2.79 million barrels for the week ending September 6, according to The American Petroleum Institute (API). For the week prior, the API reported a 7.4-million-barrel decrease in crude inventories.
The official data from the US EIA will be released later on Wednesday.