For the first time
this th, the global oil benchmark, Brent crude, on Thursday traded above $50
per barrel as supply disruptions and increased global demand continue to fuel a
recovery.
Brent, against which
Nigeria’s oil is priced, hit $50.14 per barrel at 8:30am, data from Energy
Intelligence showed.
The rise followed US
data on Thursday showing that oil inventories had fallen, largely due to supply
disruptions following fires in Canada.
Brent crude has now
risen 80 per cent since it hit 13-year lows of below $28 per barrel in January
this year.
The difference between
the global benchmark and Nigeria’s budget benchmark has now risen a little
above $12 per barrel. But the recent disruptions to oil output occasioned by
militant attacks have prevented the country from benefitting from the increase
in oil price.
The Minister of State
for Petroleum Resources, Dr. Ibe Kachikwu, had recently said the nation’s oil
output had dropped to 1.4 million barrels per day from 2.2 million bpd.
US crude oil
inventories fell by 4.2 million barrels to 537.1 million barrels in the week to
May 20, according to US Department of Energy data, the BBC reported.
Canada is the biggest
supplier to the US and wildfires in the western provinces have knocked out
about a million barrels a day.
Talks in recent months
between the Organisation of Petroleum Exporting Countries and Russia about
freezing oil production had already helped prices recover.
Short-term disruptions
to oil supplies have also lifted the price, as they have offset higher
production from Iran and Saudi Arabia.
As well as the
disruption to key oil production facilities in Canada, attacks by militant groups
continue to restrict oil pipelines in Nigeria.
Demand has also been
better than expected from major economies such as China, India and Russia.
Against this improving
backdrop, analysts are starting to modestly raise their forecasts.
Goldman Sachs said earlier
this month that it now expected oil prices to consistently hit $50 a barrel in
the second half of 2016 and $60 by the end of 2017.
The US bank said, “The
oil market continues to deliver its share of surprises, with low prices driving
disruptions in Nigeria, higher output in Iran and better demand.
“With each of these
shifts significant in magnitude, the oil market has gone from nearing storage
saturation to being in deficit much earlier than we expected.”
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