SWITZERLAND, MAY 19 – Oil prices are rebounding after two months of downhill plunge as world economies gradually resume after COVID-19 lockdowns.
Today’s Echo gathers that the international oil price benchmark, Brent crude, rose to its highest level at about $35 per barrel since March on Tuesday as major oil producers cut their output levels and countries eased lock-downs.
The Organisation of Petroleum Exporting Countries(OPEC) and its allies reached a deal in April to cut oil production by 9.7 million barrels per day in May and June in a bid to prop up the price of the commodity.
As at Tuesday, May 19, Nigeria’s crude, Bonny Light was trading at about $34 per barrel.
OPEC said last Friday that the total effective global production adjustments could reach 20.1 million bpd, noting that some of its members, namely Kuwait, Saudi Arabia and the United Arab Emirates, had agreed on an additional 1.2 million bpd adjustment.
The Chief Market Analyst at Avatrade, Naeem Aslam, was quoted by Business Insider as saying that Monday was turning out to be a “remarkable day” for both Brent and the US benchmark, West Texas Intermediate.
He said, “The global economy is reopening and the oil glut has eased off.
“It is still unclear if the prices can continue their upward journey at the current pace, and especially if we have a valid reason for the crude price to top the $35.”
Energy Intelligence reported on Monday that OPEC might extend the cuts to the rest of the year, citing an unnamed OPEC delegate.
Meanwhile, even as the threat of COVID-19 persists, many economies across the world are gradually easing back to life. Several states across the United States have allowed businesses to open for the past three weeks with strict hygiene and social distancing protocols.
Across Europe, people are already seeing an easing of lockdown measures, as businesses reopen and children start going back to school.
Germany has begun opening up: control of lifting the lockdown will now be in the hands of Germany’s 16 federal states. But Chancellor Angela Merkel has stressed that an ”emergency brake” will be applied anywhere that sees a surge in new infections.
According to the BBC, as countries in Asia cautiously ease their restrictions, traffic has returned to the roads and pollution is spiking.
“This probably explains some of the rising demand for oil,” an oil consultant told Today’s ECho.
“This will be good news to Nigeria, which already has over 84 million barrels of crude on the high seas without buyers while the country desperately needs funds. We only hope the price will go higher,” the source added.