Crude Oil prices rose above the psychological level of $50 a barrel on Thursday in one of the best news in a turbulent one week for Nigeria. This was the first time in nearly seven months crude oil prices will rise above $50 per barrel indicating that the over supply that was a bane of the market for over two years was easing.
Reuters reports “Global benchmark Brent crude oil was up 56 cents at $50.30 a barrel at 1220 GMT, having reached $50.71 the highest in nearly 7 months, after a larger-than-expected draw in U.S. crude oil inventories last week indicated buyers are starting to mop up spare supply.”
Reports suggest the reason for the rise in oil prices in recent weeks is attributed to a number of non-oil related factors. For example, the wildfires in Canada and unrest in Nigeria and Libya, is said to have knocked out nearly 4 million barrels per day of production according to Reuters.
At $50, oil prices have now risen above the Budgetary benchmark of $38 giving the government a morale booster as it strives to raise funding for its budget. Analysts however indicate that even though prices are up, Nigeria is not poised to benefit due to the bombings of production installations in the Nigeria Delta. Nigeria therefore finds itself in a double jeopardy as it cannot even benefit from the spike in global prices which was partly caused by militants resident in the country.
Optimist will however mention that a price increase cushions the negative effects of a drop in output and is an incentive for the government to tackle the issue decisively.
