Economic Commentary | Declining Oil prices, where do we stand?

Oil & Gas
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Monday, October 20, 2014 3:16 PM / Meristem Research


Oversupply Pressuring Oil Prices The recent decline in oil prices can be directly associated with increasing oversupply in the global market as Shale oil output in the US is forcing cutback on importation (no importation from Nigeria in H2:2014), coupled with reduced demand from other regions including China.


WTI has declined by 19.12% since July while BRENT and OPEC basket also shed 21.97% and 25.25% respectively.


Oil Prices Pressuring the Naira The recent rapid depreciation of the Naira can be associated with the declining oil prices. However, other unfavourable factors (capital reversals due to risk associated with upcoming elections) also aided the depreciation.


Despite a 4.02% and 5.59% decline in WTI and OPEC basket between June and August, Naira stayed relatively flat at NGN162/USD. Although recent actives has brought about a 2.10% depreciation since August.


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