by Tolu Orekoya
With America slowly dropping back as Nigeria’s primary market for oil and the global economy showing signs of slowing, which in turn is pushing oil prices downwards, Nigeria has a lot to be worried about. While demand in Asia has helped shield the national economy from downturn, signs that China’s usually bustling economy might be cooling slightly should be worrisome for the economy.
With National Assembly looking to add a bigger burden to the national coffers by contemplating adding six new states to the federation, and fears that Euro Zone banks may withdraw their credit lines with Nigerian banks due to their economic woes, things are looking grim for the country.
Oil prices fell on Tuesday in choppy trading, faltering after a downgrade of Spain’s credit rating sent the euro to nearly a two-year low against the dollar.
Egan-Jones Ratings cut Spain’s credit rating for the third time in less than a month, weakening the single currency and rekindling fears of a spreading debt crisis in the Euro zone.
“Crude oil prices dropped as soon as the Egan-Jones downgrade of Spanish debt was announced,” said John Kilduff, partner at Again Capital LLC in New York.
“The reaction highlights the nervous state of the markets over the slow creep toward the precipice of a market disruption event in the eurozone,” he added.
Optimism about polls showing leads for Greek political parties in favour of austerity and a report that China’s biggest banks have accelerated lending had combined to lift oil and equities before Spain’s downgrade.
Also supportive for oil were revived concerns about supply disruptions because Iran’s dispute with the West over Tehran’s nuclear program remains unresolved.
Brent crude for July delivery fell 43 cents to settle at $106.68 a barrel, having swung from $106.06 to $107.95.
Culled from Calgary Herald