Oil prices fall

Oil prices fell as euphoria faded over a budget deal reached earlier this week by U.S. lawmakers and traders focused on signs of lackluster demand.

Benchmark crude for February delivery fell 74 cents to $92.18 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 20 cents to $92.92 per barrel on the Nymex on Thursday.

The deal reached in Washington prevents the "fiscal cliff" crisis of steep, automatic tax and spending increases from hammering the U.S. economy. But it puts off for two months some hard decisions about spending cuts that are needed to get the country's mammoth deficit under control.

Brent crude, used to price international varieties of oil, fell 66 cents to $111.48 a barrel on the ICE Futures exchange in London.

Oil Price: US lauds Saudi

The White House has lauded comments by Saudi Arabia's energy minister that consumer nations need not release emergency petroleum reserves to calm oil prices.

Saudi Arabia's Oil Minister Ali al-Naimi said in a statement on Sept. 10 that the world's largest crude exporter was concerned about high oil prices, would take steps to moderate them, and would meet any additional demand from its customers. The kingdom would continue to work with other Gulf Cooperation Council countries and with OPEC to defend the stability of the oil market, Naimi said.

High US oil prices, which hit more than $100 a barrel, the loftiest since May 4, have led industry watchers to guess whether President Barack Obama will tap the Strategic Petroleum Reserve (SPR) ahead of the Nov. 6 election.

The White House reiterated it was keeping all options on the table to calm prices, but also applauded Naimi's comments.

Budget 2012: Oil production below projection

The Central Bank of Nigeria’s 2012 Q2 report has revealed that the volume of oil pumped in the second quarter of 2012 fell below the projected volume stipulated in this year’s budget. According to the CBN, Nigeria pumped 2.12 million barrels per day of oil in Q2, a volume that was  16.98 per cent below  the 2.48 million bpd,  which the government had projected in this year’s budget.

The report, which was published on the bank’s website, noted that oil production had risen from an average of 2.06 million bpd in the first quarter.

If the current figures by the apex bank are correct, then Nigeria may have to increase its output in the second half of the year to fund all the spending in this year’s budget without taking on more debt or lowering its oil savings rate.

The benchmark oil price in the budget was $72 a barrel, well below the market price and above which Nigeria is supposed to save extra revenues in the Excess Crude Account. But if production fails to meet projections, government will need to take more money back from the ECA to meet the shortfall.

The Nigerian National Petroleum Corporation said last month that crude oil production reached an all-time high of 2.7 million bpd. But industry experts have questioned these figures, which are at the top end of Nigeria’s capacity and come during a period when oil theft by criminal gangs was at record highs. The CBN’s oil output data usually comes in lower than figures from the NNPC and the oil ministry, who both have an interest in showing progress in the industry’s performance, although they also have the best access to the data.