The price of Brent crude, the global benchmark, fell as low as $58.50 in London, yesterday while in the United States, crude grade plunged by $1.86 at $54.05 a barrel in New York as news emerged of a slowdown in Chinese industrial activity and weakening emerging-market currencies fuelled concerns over demand.

The Federal Government had cut the benchmark from $77.5 to $73 per barrel in November and further down to $65 on which the Medium Term Expenditure Framework, MTEF, which was sent to the National Assembly yesterday for consideration by President Goodluck Jonathan, is based.

The Coordinating Minister for the Economy and Minster of Finance, Dr. Ngozi Okonjo-Iweala will present the 2015 budget estimate before the two arms of the National Assembly for consideration this morning.

The revised budget contains much lower estimates for capital expenditure, which was cut from N1.436trn to N1.208trn, and again further reviewing it down to N627bn in the new proposal.

Also, the new SURE-P Capital expenditure came down from N184bn to N102bn, while MDAs capital expenditure proposal came down from N872bn to N380bn.

The recurrent expenditure vote however remained virtually unchanged at N2.622trn, while the National Assembly budget of N150bn remained unchanged.

While the budget is based on projected oil production of of 2.278 million barrel per day, kerosene subsidy has been cut from N156bn to N91 billion while overall revenue target is N3.602trn.

In the letter to the Senate President, David Mark by President Jonathan, the decision to ask the finance minister to lay the budget before the two chambers of the National Assembly was predicated on by Section 81(1) of the 1999 Constitution as amended.

President Jonathan also hinted that the budget estimates may further be reviewed downwards if oil prices continues to precipitate downwards beyond the current framework.

He urged the lawmakers to give the budget proposal an expeditious passage, to enable the country start early the implementation of the budget next year, adding “there is no iron clad guarantee where oil are concerned due to numerous underlying global geo-political factors that are outside our control and unpredictable”.

Brent crude price have dropped by 45 per cent since reaching a 2014 high of $115 a barrel in June due to a combination of oversupply, especially from US shale oil producers; slowing demand and the decision of the Organisation of Petroleum Exporting Countries, OPEC, to focus on protecting its 40 per cent share of the global oil market instead of making production cuts.

Analysts believe a further cut in the 2015 budget benchmark is imminent with oil below $60, although views are mixed as to whether the low prices will fall to $50 as speculated or recover substantially.

Newswires reported yesterday that the global outlook for the commodities market remained grim as no evidence has emerged that producers will cut back on production.

“The trend remains down,” said Robin Bieber, technical analyst and director at London-based oil broker PVM Oil Associates. “It is not advised to be long.”

OPEC’s decision on November 27 not to reduce its production target of 30 million barrels a day prompted speculation that the group is willing to let crude slide to a level that would slow U.S. output.

The 12-member group, which includes Nigeria, pumped 30.56 million barrels a day in November, exceeding its target for a sixth straight month, according to a separate Bloomberg survey of companies, producers and analysts. It is scheduled to meet next in Vienna on June 5.

Monetary tightening measures by the Central Bank of Nigeria, CBN, including an interest rate hike to 13 per cent, eight per cent devaluation of the naira and increases in bank’s cash reserve requirements all in a bid to protect external reserves from the effects of the oil price slump, has taken its toll on banks which are experiencing a huge cash squeeze, insiders said.

Interbank overnight lending rate rose further by 20 percentage points yesterday to 80 per cent, following a huge cash withdrawal from the system by the Nigeria National Petroleum Corporation, NNPC.

NNPC had last week sold about $300m to some banks as part of its usual month-end dollar sales and put the naira proceeds into its account with the CBN.

Interbank lending rates had fluctuated wildly between a high of 70 per cent and a low of 14 per cent since last month, when the CBN raised the cash reserve requirement, CRR, on banks’ private sector deposits from 15 per cent to 20 per cent, Reuters said.