As Nigeria’s oil production hits 2.5mb/d, it means that crude production now stands 1.8 million barrel per day without condensate, and 2.5million per day with condensate. This was the revelation of the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, recently.
Though he spoke after chairing the opening ceremony of the 2018-2019 crude oil term contracts in Abuja earlier in January.
However, with daily sales of about 2.5mbpd at $71, the federal government will be making daily sales of about $177.5.
With oil benchmark as $45, it means further that whereas $112.5m goes direct to the Federation Allocation Committee (FAC), the difference of about $65m will go to the Excess Crude Account (ECA) on a daily basis.
Already, there are indications that crude oil is looking up to hit $80 per barrel, highest since December 2014.
The development is linked to U.S. crude inventories which posted a 10th straight week of declines and as the dollar continued to weaken.
Otherwise, oil prices rallied to three-year high, boosted by a record 10th straight weekly decline in U.S. crude inventories.
International benchmark Brent futures were nudging 71 dollars per barrel, both crude benchmarks are up by almost 60 per cent since the middle of last year.
U.S. West Texas Intermediate (WTI) crude futures climbed to 66.22 dollars per barrel in early trading, also the highest level since early December 2014.
Price support has also been coming from supply restrictions led by a group of producers around the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, which started last year and are set to last throughout 2018.
“The Saudi’s and Russians continue to work together to talk the oil market higher and last night, the countries’ two oil ministers said they were working together on other longer-term projects as well,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
“That and the USD fall, along with another inventory draw combined to drive (crude) up,” he added.
U.S. crude inventories C-STK-T-EIA fell 1.1 million barrels in the week to Jan. 19, to 411.58 million barrels, the Energy Information Administration (EIA) said on Wednesday.
That’s the lowest seasonal level since 2015 and below the U.S. five-year average around 420 million barrels.
In foreign exchange markets, the U.S. dollar hit its lowest level since December, 2014 against a basket of other leading currencies.
A weakening dollar often results in financial traders taking investment out of currency markets and into commodity futures like crude.
Analysts said that rising oil prices would likely start to have an inflationary effect especially in developing economies that are dependent on oil earnings like Nigeria.