Oil extended losses below $48 a barrel amid speculation that U.S. inventories will expand, deepening a global supply glut that’s driven prices to a five-year low.
This spells more trouble for Nigeria’s economy which depends heavily on oil revenue and had depleted its buffers before the rainy on the pressure of the state governors most of whom squandered the money on inconsequential projects.
Nigeria’s bourse lost a whopping N471 billion on Tuesday, as prices of most stocks crashed as investors sell off on fears of worsening economic crisis.
The country,s currency is selling close to N200 to the dollar in the unofficial markets as dwindling oil receipts continue to take toll on the country’s external reserves.
According to Bloomberg report, Futures declined for a fourth day. Stockpiles in the world’s biggest oil-consuming country probably rose by 700,000 barrels last week, a Bloomberg News survey showed before a government report tomorrow.
Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as it competes with U.S. producers. The market faces “more problems” this year, according to Morgan Stanley, with surging output in Russia and Iraq contributing to a surplus that Qatar estimates at 2 million barrels a day.
Oil Prices
“The path of least resistance is lower,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion. “There is no bullish news. OPEC refuses to cut production and there is no evidence of falling production outside of OPEC.”
West Texas Intermediate for February delivery dropped $2.11, or 4.2 percent, to $47.93 a barrel on the New York Mercantile Exchange, the lowest settlement since April 2009. The volume of all futures traded was about 55 percent above the 100-day average for the time of day.
