The recent crude oil price rally being witnessed looks like it is going to be sustained. Crude oil appears to be heading for its first back to back weekly gain since the month of February 2020, following some positive outcomes in the oil market.
This is so as the recovery in oil demand and the output cuts from OPEC+ and other top oil producing countries have started to rebalance an oil market that is awash with crude oil.
The oil futures in the New York exchange, which once traded below zero dollar, is around $24 per barrel in Asian trading on Friday. This represents a 20% increase this week. Also, the Brent crude, which is around $30 per barrel, has had a 15% price increase in the last week.
It was reported earlier that Saudi Arabia’s oil giant, Aramco, raised the price for all its crude oil grades to all regions for June, in a move that many analysts see as the start of demand recovery. This also hints that OPEC+ has started to cut production in the aim to stabilize the market.
There are also suggestions that the demand increase is being aided by gradual relaxation of lockdown directives in some big economies globally.
According to a monitored report from Bloomberg, although there is a huge oil glut to clear, the head of commodity research at Goldman Sachs, Jeffrey Currie, said that global oil demand is on an improving trajectory and may even exceed supply by the start of June.
This stabilization of the oil market will be a piece of good news to Nigeria, as the oil price recovery will help boost the country’s revenue and foreign exchange earnings.