2017 budget assumptions threatened as oil price dips to $43.35

… Shell records lowest profit in 11 years

Nigeria may be in for more troubles as the 2017 tentative budget benchmark of $42.5 per barrel of crude oil faces fresh threat with yesterday’s crude oil price sliding to $43.35.
This is even as Royal Dutch Shell announced its quarterly results, showing a 72 per cent decline in profit in one fiscal year and the lowest in 11 years. Yesterday’s $43.35 crude oil price was the lowest point since April 2016.
Minutes after official US energy data was released, showing unexpected glut of oil in storage, the prices began to tumble. Brent crude quickly dropped from around $44.90 a barrel to $43.68, falling by over 2 per cent in less than an hour. The price fell further to $43.47.
Brent crude touched $43.35 on Thursday while West Texas Intermediate (WTI) sank as low as $41.94 within the same period.
Shell shocked the market, which expected about 80 per cent more earnings than posted. Shell’s Chief Executive Officer, Mr. Ben Van Beurden, blamed the development on oil prices, saying lower oil prices continued to be a significant challenge across the business, particularly in the upstream.
He further revealed that the company’s second-quarter production was 3.51 million barrels of oil equivalent a day, less than major projections.
In June, Brent crude prices peaked at $52.54 per barrel, its highest point since October 2015.
Recall that the Federal Government had on Monday,   unveiled its key benchmarks for the 2017 budget, pegging oil price at $42.5 per barrel and daily production output at 2.2 million barrels per day (bpd).
Minister of Budget and National Planning, Udo Udoma, unveiled the government’s plan at the medium term fiscal framework public consultative forum with Civil Society Organisations (CSOs) and the Organised Private Sector (OPS).
Udoma revealed that the Federal Government expects oil output to move up to 2.2 million bpd in 2017, rising to 2.3 million and 2.4 million in 2018 and 2019 respectively despite hostilities in the Niger Delta region.
The government also expects oil prices would firm to $45 in 2018 and $50 in 2019. Udoma believes the naira would settle at N290 against the dollar in 2017 as against its current over N300 per dollar price.