Daily Independent (Lagos)
Adeola Yusuf
4 December 2008
Lagos — Oil prices fell on Thursday to levels last seen four years ago when it sold for $45 per barrel, indicating that a tougher time for the Nigeria's 2009 Budget.
Nigeria, one of the major exporters of oil has benchmarked its 2009 Budget on $45 a barrel.
Light sweet crude fell 95 cents to $45.84 on the New York Mercantile Exchange after tumbling close to $45. The last time crude traded that low was in February 2005 when oil hit $44.60 per barrel.
Also hitting new lows were average retail gasoline prices, which fell below $1.80 nationally for the first time since January 2005.
The massive pullback in consumer spending, especially on gasoline and other fuels, has left analysts stunned.
Just four months ago, crude rocketed close to $150 and the average gallon of gasoline went for more than $4 per gallon.
No one believed crude would give up $100 by December, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"I think the traders are looking at that and they are saying, 'Well, December is OK, it's relatively balanced here and there, but my goodness all of these layoffs after Christmas, the cold weather, the cocooning, the bills coming due after Christmas, January is just going to be awful,'" Kloza predicted.
Dour economic reports continue to spill out during a week when the National Bureau of Economic Research said the economy fell into a recession in December 2007.
"It is the overall slowing of the economy that is pressuring oil," said Phil Flynn, an analyst at Alaron Trading Corp. "People are waking up to the fact that there may not be much demand."
There were signs that the economic environment is worsening in Nigeria and its major oil consumer, the United States.
While the exchange rate in Nigeria, Naira crashed on Wednesday, the US government said the number of
people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, when the economy was emerging from a recession.
Factory orders plunged a bigger-than-expected 5.1 per cent in October caused by big cutbacks in demand for steel, autos, computers and heavy machinery. It was the largest decrease since an 8.5 percent fall in July 2000.
The Labour Department reported that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That was significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters.
The four-week average of initial claims, which
smoothes out fluctuations, increased to 524,500, also the highest level since December 1982, the department said.
500 jobs and media conglomerate Viacom Inc. said it will eliminate about 850 jobs.
Prices at the pump continued to decline, falling 1.4 cents overnight to $1.789, according to auto club AAA, the Oil Price Information Service and Wright Express. That price is down 60.2 cents from a month ago and $1.255 from a year ago.
The lower prices may be starting to boost demand for gasoline. While sales have remained below levels of a year ago, the gap has narrowed in recent weeks.
Still, Flynn does not see enough demand to justify big increases in oil and gas prices.
"We have entered a new era of lower gasoline prices and oil prices," he said.
The government said natural gas storage levels in the U.S. tumbled last week, but remain 2.1 percent above the five-year average for this time of year.
The Energy Department's Energy Information Administration
(EIA)
said in its weekly report that natural-gas inventories held in underground storage in the lower 48 states fell by 64 billion cubic feet to about 3.36 trillion cubic feet for the week ended November 28.
Analysts had expected a drop of between 61 billion and 66 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading, gasoline futures fell 1.8 cents to $1.02 a gallon. Heating oil dropped 1.57 cents to $1.57 a gallon while natural gas for January delivery fell 28 cents to $6.066 per 1,000 cubic feet.
In London, January Brent crude fell 93 cents to $44.51 on the ICE Futures exchange.
Be the first to Write a Comment!
Copyright © 2008 Daily Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
