By Adedapo Adesanya
Crude prices traded on Wednesday below where they were before the September 14, 2019 attacks on Saudi Arabia that temporarily led to the kingdom’s losing half of its production.
The Brent Crude on Wednesday night depreciated to $57.54 per barrel after shedding $1.35 or 2.29 percent as the the U.S. benchmark crude, West Texas Intermediate (WTI) Crude, on the other hand, was down by $1.07 or 2 percent to trade at $52.55 per barrel.
This means that the US Crude drop has fallen about 17 percent from the peak reached on the first trading day after the crippling attacks on Saudi Arabian oil facilities.
This indicates that oil is heading toward a two-month low after swelling inventories in the US economy added to a pessimistic and weakening economic backdrop.
According to the US Energy Information Administration, oil stockpiles rose by 3.1 million barrels last week, leading oil prices to further slip on Wednesday.
Also, oil prices were affected by a slide in broader equity markets which is in turn fueling fears about the American economy slowing.
Signs of easing geopolitical tensions in the Middle East also weighed on prices, as Iran Oil Minister Bijan Zanganeh sought to ease tensions with Saudi Arabia with projections that there will be surplus in oil supply next year.
The situation is more worrisome for the Nigerian economy, which is still in recovery mode after slipping into recession in 2016 following decline in oil prices and attacks on its facilities by militants in the oil-rich Niger Delta region.
Though the attacks have been brought down to its barest minimum, the Africa’s largest oil producer, which has its commodity priced under the Brent, is yet to meet full capacity of 2.3 million barrel per day cap. In its 2019 budget, the benchmark for oil was pegged at $60 per barrel and with the price currently below the ceiling, there could be more difficulty meeting up its targets.
