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Good news for 2017 budget as oil price jumps to $53 a barrel

After two days of decline, Brent crude LCOc1, the global benchmark, on Wednesday was up 50 cents at 52.64 dollars.

Analysts say the trend is good for the Nigerian economy not just for the rise, but for the equally rising daily production which the Minister of State for Petroleum, Dr. Ibe Kachukwu has said is risen to 2.25bpd.

If the trend continues with the already rising production, government may rest further borrowing plans.

Oil rose toward 53 dollars a barrel on Wednesday ahead of a U.S. inventory report expected to show crude stocks dropped for a sixth week.

U.S. West Texas Intermediate (WTI) crude CLc1 added 44 cents to 49.61 dollars

Wednesday’s focus will be on the U.S. government report to see whether it confirms the figures from the API, an industry group.

Analysts expect crude stocks to have fallen by 2.7 million barrels and gasoline by 1.5 million barrels.

A further drop in U.S. crude stocks would raise hopes that an OPEC-led effort to wipe out a three-year, price-sapping supply glut is working.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) under a deal that took effect on Jan. 1.

The deal is currently set to run until March 2018.

The deal has supported prices but an output recovery in Libya and Nigeria, OPEC members exempted from the cut, has complicated the effort.

U.S. shale oil drillers have also ramped up production.

OPEC officials met on Monday and Tuesday in Abu Dhabi in an effort to boost producers’ adherence to the supply cuts, which has been high on average in spite of relatively low compliance by Iraq and the United Arab Emirates.

In a statement after the meeting, OPEC said the conclusions reached would help boost prices.

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