More worries for Nigeria as oil dips to 6-year low

Nigeria’s principal source of foreign exchange hit a 6-year-low on Thursday as it fell by 4% on the international market to $41 per barrel.

The black gold dipped to $40.46 a barrel for the first time since early 2009, as the meltdown in oil sector sent energy-related stocks plunging.

According to CNNMoney, the falling oil prices has long favoured the American market, as the produce outside the Organisation of Petroleum Exporting Countries (OPEC), but this fall is a red flag for many oil experts in the country.

“If oil breaks below $40 a lot of our clients will see it as a watershed moment. It begins to signal more about economic recession, maybe not here, but broadly,” said Nicholas Colas, chief market strategist at ConvergEx.

The supply glut in the oil sector has not helped matters, as supply has continually been more than demand, driving the prices low on the international market.

Fresh evidence of the oversupply problem was revealed on Thursday as the US government said crude stockpiles surged by 2.6 million barrels last week.

This is a far cry from the about 1.6 million barrels oversupply anticipated by analysts.

Due to characteristic slow update of government figures, the central bank of Nigeria still says Bonny Light is selling for $47.54 on the international market.

The NNPC on the other hand does not have current figures, but its latest figures trades Brent crude at $48.81.

The 2015 Nigerian budget maintains a crude oil benchmark price of $53 per barrel.