US Based Investment Banking Giant, Morgan Stanley has predicted that the price of oil will continue to remain low and cutting its quarterly crude forecasts for this year by as much as 51 percent.
According to Bloomberg, Morgan Stanley now sees oil mostly falling through 2016, compared with a previous outlook for prices to rise each quarter.
According to the report, Brent crude is expected to average $29 a barrel in the three months to December, compared with its earlier estimate for $59 in a Jan. 18 note. Bloomberg further explains that “Morgan Stanley expects Brent to average $31 a barrel in the first three months of this year and $30 in the second and third quarters. This compares with earlier targets of $42, $45 and $48, respectively. The contract for April settlement rose 32 cents, or 0.9 percent, to $35.36 a barrel at 2:10 p.m. Singapore time.”
This spells doom for Nigeria as most of Nigeria’s oil is said to be off shore and costing between $24 to $26 per barrel. The 2016 Budget also has a benchmark price of $38 per barrel and already runs at a deficit said to be in the region of N3 trillion. Nigeria will need to see share price remain at above $40 is it is to avoid further fiscal pressures.
Things could however change if the rumoured meeting between OPEC, Russia and other Non OPEC countries take place even though no date has been fixed yet and Saudi Arabia may not be in support.