Fuel subsidy drops to N412.8 million daily

The Federal Government’s daily spending on petrol subsidy has declined from the N1.07 billion it recorded as at September 8, to N412.8 million as at October 23. It earlier dropped to N889.44 million on September 22.

According to the pricing template of the Petroleum Products Pricing Regulatory Agency (PPPRA), subsidy on a litre of fuel stands at N8.6k as at October 23.

Fuel subsidy has been on the decline in the last two months falling from N55 per litre in June 1st, 2015 to N14 in October 2015.

Though, fuel is still selling at N87 per litre, the landing cost of fuel stands at N80.11 while expected open market price stands at N95.6.

Based on daily petrol consumption of 48 million litres, the total subsidy cost on the product as October 23, would amount to N412.8 million at N8.6k per litre.

Besides, crude-oil prices edged higher on Monday, supported by the weak U.S. dollar, but oversupply worries continued to linger on the market.

Specifically, Nigeria’s light sweet crude futures for delivery in December rose from $44.35 to $44.76 a barrel at the New York Mercantile Exchange.

Brent crude, the global oil benchmark, rose 0.5 per cent to $48.22 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.6 per cent at $44.88 a barrel.

The weaker dollar boosted oil and other commodities on Monday. As oil is priced in dollars, it becomes more attractive for holders of other currencies as the greenback depreciates. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.2 per cent.

Prices were also boosted by the falling U.S. oil rig count, which many see as a rough proxy of activity in the industry.

Industry group Baker Hughes reported late on Friday that the number of rigs drilling for oil in the U.S. dropped by one last week to 594, making it the eighth straight weekly drop. There are now about 63 per cent fewer rigs from a peak of 1,609 last October.

Pump jacks in the Midway Sunset oilfield in California. Industry group Baker Hughes reported late on Friday that the number of rigs drilling for oil in the U.S. dropped by one last week.

Pump jacks in the Midway Sunset oilfield in California. Industry group Baker Hughes reported late on Friday that the number of rigs drilling for oil in the U.S. dropped by one last week. 

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