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Commodities

Brent crude recovers to 90% of pre-coronavirus levels, as global demand rises

The oil market is stabilising amidst compliance of OPEC+ members with the agreement to cut oil production.

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Oil prices, OPEC crude oil production drops to its lowest in nearly 30 years

After reaching record lows of $16 a barrel in April, global crude oil benchmark, Brent crude, has seen a stable recovery around the $40 range this month.

The rising demand for brent crude was led by China, with its large appetite for oil, followed by Europe and North America. This shows a stable growing demand for crude in the coming months.

READ ALSO: NNPC GMD says recent oil price surge is cosmetic, driven by sentiments

Global oil trader Vitol expects demand to rise by 1.4 million barrels a day in June. Meanwhile, Trafigura, another multinational oil trader, says that oil demand is back to 90% of levels before the Coronavirus pandemic crashed demands – a view that Saudi’s Aramco also supports.

READ MORE: FG discloses impact of OPEC+ oil cut, how to manage post subsidy era

The oil market is stabilising amidst compliance of OPEC+ members with the agreement to cut oil production.

Trafigura’s co-head of oil trading, Ben Luckock told Bloomberg, “At $40 a barrel, we can trade a few dollars higher and a few lower. But for the first time in a few months you can see a range. The market stability is here to stay. The physical market is strong.”

Last week, Nigeria’s Vice President, Yemi Osinbajo revealed in one of the Sustainability Committee’s reports that Nigeria is expected to earn N88.4 billion monthly at an average crude price of $30.

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The new oil stability around $40, which is above the sustainability committee’s benchmark, will help oil-dependent nations like Nigeria breathe a sigh of relief.

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Commodities

Oil prices surge over China’s growing appetite for energy

British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.

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Where next for oil prices?, Brent crude futures gained 0.14 to trade at $34.70 at the time this report was drafted, recovering some of its losses earlier in the oil trading session. , Brent crude price fails to remain over $40, concerns over pledge cut strengthens

Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.

At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.

READ: Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station

The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;

“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.

READ: Did OPEC+ April fool the oil market?

But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.

Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”

What to expect

Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.

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Commodities

Oil prices stay on course as Saudi’s Energy Minister reassures traders

British based oil contract traded at about $63 a barrel while the WTI futures were trading slightly below the $60 price level.

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Crude oil prices slump, as partial lockdowns resume

Crude oil prices remained relatively firm at the early hours of Friday’s trading session as oil traders digested Saudi Arabia’s defense of OPEC+ plans in raising output thereby capping gains.

At press time, the British based oil contract traded at about $63 a barrel while the West Texas Intermediate futures were trading slightly below the $60 price level.

Saudi energy minister Prince Abdulaziz bin Salman recently revealed that there were no pressing concerns of demand/supply dynamics changing gear amid the gradual boost in outputs in an interview aired on Thursday, adding that OPEC+ had all ammunition put in place to change course if necessary. OPEC+ will continue to meet monthly on reviewing the energy market supply dynamics.

READ: Has the Naira been devalued?

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the prevailing market sentiment amid macros pointing to more oil supplies hitting the sensitive energy market and an upsurge in COVID-19 caseloads.

“Positioning is much cleaner, although the market remains directionally long oil. However, the sudden calm and drop in volatility have attracted passive investors back to the fray as the market structure around prompt spreads start to tighten and the dollar begins to roll over.

“Still, the conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers in India plus parts of Canada as well as Tokyo backtracking into the lockdown Abyss, together with reports linking the UK’s Covid-19 vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay.”

READ: Did OPEC+ April fool the oil market?

What to expect: The most recent OPEC+ agreement on releasing barrels into such present demand was not out of place – suggesting the futuristic price of oil might range between the $60 -$70 price levels with production normalization vs current high excess production capacity taken into consideration.

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