Oil price hits two months high $53

Oil vessel
Oil vessel

Oil prices hit a two-month high on Monday lifted by a tightening US crude market and the threat of sanctions against OPEC-member Venezuela.

Brent crude futures were 52.90 dollars per barrel earlier in the day, their highest since May 25.

U.S. West Texas Intermediate (WTI) futures were up 16 cents or 0.3per cent at 49.87 dollars per barrel.

The entire WTI curve is close to moving back over 50 dollars per barrel, with only September and October a notch below that level.

The price rise put both crude benchmarks on track for a sixth consecutive session of gains.

Prices have risen around 10 per cent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries, OPEC, and other major producers, including Russia.

At that instance, the group discussed potential measures to further tighten oil markets.

“U.S inventories are showing massive drawdown, Saudi Arabia seems intent on playing its role as the world’s swing producer.

“Impending sanctions on Venezuela by the U.S will almost certainly be oil price-supportive,” said Jeffrey Halley, analyst at futures brokerage, OANDA.

The U.S is considering imposing sanctions on Venezuela’s vital oil sector in response to Sunday’s election of a constitutional super-body that Washington has denounced as a “sham” vote.

However, traders said the biggest price supporter was currently a tightening U.S oil market.

“Strong increases in the price of oil … (were) fuelled in large part by the substantial drawdowns in U.S. inventories over the past several weeks,” said William O’Loughlin, analyst at Rivkin Securities.

“A continuation of this trend could indicate the oil market is rebalancing thanks to the production cuts by OPEC and Russia,” he added.

After rising by more than 10 per cent since mid-2016, U.S oil production dipped by 0.2 per cent to 9.41 million barrels per day (bpd) in the week to July 21.

Drilling for new U.S. production is also slowing, with just 10 rigs added in July, the fewest since May 2016.

The tighter market was also visible in the price curve, which shows backwardation in the front end.

Backwardation is a market condition in which prices for immediate delivery of a product are higher than those later on.

(Reuters/NAN)


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  • 0tile

    Nigeria has been reaping good windfall this year, as a result the country should have come out of recession. The country cannot complain of low oil price again, but it remains to be seen how Buhari, our Petroleum Minister is going to make good use of our resources. Every oil producing country in the world is booming except Nigeria and Venezuela. In one Nigeria poor leadership has wrecked havoc on the people. Who will save the country? God have mercy.

  • tsunami1earthquake

    Oil price, that’s all Nigeria and Nigerians care about. When oil price rises, there is cause for joy and the reverse is the case. When will Nigeria be bold and resourceful enough to step out of the shadows of these decades of quagmire and reinvent itself in other sources of national wealth?

    The country and its citizens are just a group of lazy drones. Period!

    • Tommy Soto

      I’ve read numerous articles recently in PT about the progress in agriculture and food self sufficiency. Exports of yams and rice are a fast approaching reality. Hopefully cocoa production can regain focus and eminence.

  • Tommy Soto

    Much rather see a photo of an up and running Naija oil refinery than a tanker ship taking the resource out and then re-importing it with multiple hands in the pot enriching themselves.

  • George

    Evil Buhari and his bang of criminals headed by that useless Yoruba monkey will still complain