Oil prices took a jump to the highest level in seven weeks on Tuesday, as the market continued to be propelled by economic and oil demand rebound in the United States and Europe.
The losses from India, Brazil and other countries that are suffering hugely from the COVID-19 pandemic weren’t enough to stop the gains as investors bet that the rollout of vaccines will permit a return to pre-pandemic conditions.
Brent Crude, Nigeria’s benchmark, climbed to $68.77, up by over 1.32 per cent on the day, while the U.S. benchmark WTI Crude was back above $65 per barrel, having touched the highest level since March earlier in the day, up by 1.29 per cent at $65.57.
Although the rising price of crude oil has raised Nigeria’s hope of effectively funding its 2021 budget, but it is currently in a dilemma as the landing price of petrol continues to rise, further burdening the Nigerian National Petroleum Corporation (NNPC), which has continued to shoulder the subsidy payment.
The government promised an end to fuel subsidy last year, but rising oil prices have complicated the effort, with the state oil company disclosing that it’s still negotiating with organised labour to find a way to allow petrol price to float without unduly harming the poor and working class.
The oil price rise Tuesday was further supported by a weaker U.S. dollar, which fell after Monday data showed that U.S. manufacturing activity grew in April at a slower pace than expected.
In Europe, the European Union (EU) also gave oil bulls hope this week, unveiling on Monday a plan to open its borders to vaccinated tourists, while the European Commission proposed that the EU allow entry for non-essential travels for anyone who has received the last dose of an EU-approved vaccine at least two weeks before arrival.
But ahead of a planned revival of supplies scheduled to begin this month, the Organisation of Petroleum Exporting Countries (OPEC) kept crude production steady in April.
OPEC pumped an average of 25.27 million barrels a day last month, about 50,000 a day less than in March.
The group and its allies, which slashed production when the pandemic struck last year, are gradually restoring about a quarter of their halted supplies over the next three months, to satisfy a recovery in global demand.
They’ll phase in just over two million barrels a day through to July, beginning with 600,000 a day this month.
Still, a survey shows OPEC maintained its discipline while waiting for the demand rebound to kick in.
Saudi Arabia, the group’s biggest member, continued to make extra cutbacks in April, pumping 8.11 million barrels a day.
The figures are based on ship-tracking data, information from officials, and estimates from consultants, including Rystad Energy AS, JBC Energy GmbH, and Petro-Logistics SA, Bloomberg noted.
The biggest fluctuations in April were seen in OPEC members exempt from the agreement to restrain output.
Libya, which has managed to revive production since late last year following a truce in its internal conflict, suffered a slight setback. Its output retreated by 80,000 barrels a day to 1.14 million a day as a budget dispute threatened attempts to fix war-damaged infrastructure.
But the disruption in Libya was largely compensated by a further increase in Iran’s output, as the country added 60,000 barrels a day to reach 2.41 million a day, the highest level in two years.
Emmanuel Addeh in Abuja