Oil closes in on 2016 budget benchmark, as WTI falls below $40
US oil – West Texas Intermediate – fell below $40 per barrel for the first time since April, as Brent crude – the international benchmark for crude oil – closed in on Nigeria’s benchmark for budget 2016.
Oil prices fell nearly four percent on Monday as marketers worry over oil glut, following the emergence of fresh data showing that the Organisation of Petroleum Exporting Corporation (OPEC) output peaked in July, 2016.
West Texas intermediate (WTI) crude fell to $39.86 per barrel, its lowest since April 20, while Brent crude was down $1.43, representing 3.3 percent, at $42.10, after a session low at $41.87.
According to OPEC secretariat, daily basket price stood at $38.97 a barrel Friday, July, 29 2016, compared with $39.79 the previous day
A Reuters survey on Friday found that output from the OPEC likely rose in July to its highest in recent history as Iraq pumped more and Nigeria squeezed out additional crude exports despite militant attacks on oil installations.
Data on Friday also showed the US added 44 new oil drilling rigs in July, the most for a month in two years, intensifying concerns that global production could once again get to unmanageable levels like in 2014-2015.
Morgan Stanley, an American financial services firm, projected on Sunday, that falling oil prices could possibly hit $35 a barrel before the end of 2016.
Morgan Stanley blamed the drop in prices on a stronger dollar, oversupply of refined crude oil products, and new oil data.
Nigeria’s budget 2016 is benchmarked against $38 oil, and projected at $42.5 for 2017 fiscal year.
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