Brent crude gained about 0.68%, to trade at $43.08 a barrel by 5.01 am local time, after a 4.3% gain recorded in the previous week.
The implied volatility for Brent crude price has plunged to the lowest levels triggered by prices collapsing at the end of Q1 2020 as many oil traders shifted their attention to tightening oil output due to the agreement with the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oils. The international benchmark is used to set the price of crude oil for about two-thirds of the world’s traded crude oil, including Nigeria’s crude (Bonny Light, Brass River, Qua Iboe, etc.).
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained in detail the positive macros affecting oil prices. He said:
“Positive macro inflection points – most recently, the rebound in US employment – continue to support oil despite the disquieting trajectory in the US coronavirus cases.
“OPEC production, which is at the lowest level since 1991 has also been helping, both with sentiment and the fundamentals for oil.
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“And while the rebalancing of supply and demand still seems to be occurring more quickly than expected, risks remain. OPEC’s planned July 15 meeting may address the possibility of once again extending the most extensive phase of the OPEC+ production cut agreement.”
Amid rising numbers of COVID-19 cases in major cities of the world’s largest economy and consumer of crude oil, a Reuters tally showed that in the first four days of July alone, 15 states in America reported upward movement in the number of new COVID-19 infections, with events over the holiday possibly triggering another upsurge.