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Nigeria frets as oil prices fall on increased U.S. drilling which means higher output

Oil prices fell on Monday as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply.

Analysts say if the rise by US drilling continues, glut will emerge, causing further drop in global oil price which will impact on Nigerian economy and the deepening foreign reserves now at over $46bn.

U.S. West Texas Intermediate (WTI) crude futures were at $62.02 a barrel at 0350 GMT, down 32 cents, or 0.5 percent, from their previous close. Brent crude futures were at $65.85 per barrel, down 36 cents, or 0.5 percent. Monday’s price falls in part reversed increases last Friday, which came on concerns over tensions in the Middle East. On a simple supply versus demand basis, however, oil markets are facing the possibility of a renewed glut after being in a slight deficit for much of last year. U.S. drillers added four oil rigs in the week to March 16, bringing the total count to 800, the weekly Baker Hughes drilling report said on Friday. “Surging U.S. production will hamper exponential growth in crude oil prices,” Singapore-based brokerage Phillip Futures said on Monday. The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have boosted spending. Thanks to the high drilling activity, U.S. crude oil production has risen by more than a fifth since mid-2016, to 10.38 million barrels per day (bpd), pushing it past top exporter Saudi Arabia.

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