The price of Brent Crude crept past $39 over the weekend as the rally on the oil price gathered steam. The current rally is due to a lot of factors according to Dolapo Oni, Head of Oil and Gas Research Desk at Ecobank.
According to him, the fundamentals still remain weak suggesting the current rise maybe temporary. In a Whatsapp message sent to us this morning Dolapo opined that the reason for the current rise were the “jobs figures which as static”. With growth also static it appears the “US economy growth is losing steam weakening the dollar and thus boosting oil demand”
In the early hours of this morning, traders also appeared to be cutting their shorts and quickly taking profit/losses as there was a need to “covering their positions”.
Another reason attributable to the current rise is the fact that US production has fallen for 5 months straight. In addition, OPEC production also dropped last month by a few 10o thousand barells per day indicating that “if Iran ramps up 500kbd as promised, it wont impact the market”
In other words, barrels are moving up and prices are heading up. Dolapo concludes that he expects to rise to about $43 this week.
The Buhari led government targeted a benchmark price of $39 per barrel for the 2016 Budget.