- Its January 5th and We are Already in an $11 Hole
- Oil producers are pumping oil like no mans business
- WTI dropped below $50 for the first time in 5 1/2 years
Brent Crude closed today at $53.3 as more supplies were pumped to an already glutted market. According to Bloomberg Russia pumped as much as 10.6million barrels per day, it highest since after the Soviet Era as oil producers jostle for market share at the expense of price. Iraq is also planning to ship out another 3.3million per day in April about 400,000 more than it did inm December 2014. And by the way, the 2.9million barrels per day it shipped last month was its highest since the eighties according to the same report.
Now this is in stark contrast to Nigeria, which currently ships an average of 2million barrels per day and in recent times selling at a discount to Asian buyers. Even the premium our Bonny Light enjoys on the Brent is almost thinning out completely. Americans have already stopped buying Nigerian oil placing more risk on the egg that lays our Golden Goose. Despite these tail winds, out eminent economic team still benchmarks our 2015 budget at $65 per barrel. I guess, the bet is that oil will somehow just rise again. Maybe the government is seeing something we can’t see or perhaps they have a crystal ball that we don’t have access to. Nevertheless, the budget is yet to be signed to law and we are already $11 in the hole.
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