Nigeria economy which in recent times has faced serious fiscal difficulties due to dwindling price of oil, may be heading for good times as the country’s oil production rose to its highest in four years, coupled with the rise in the price of Brent crude globally.
Oil output rose to 2.07 million barrels a day, compared with 2 million in the fourth quarter and 1.99 million barrels in the first quarter of last year. That’s the highest level since at least the start of 2016.
Bent crude gained on Tuesday’s London trading session, upon clear signs that major oil producers are sticking to commitments to reduce crude supply, even as more automobiles get back on the road following the lifting of COVID-19 lockdowns around the world.
Brent crude futures gained about 0.7 per cent, to trade at $36.25, 6.50 am Nigerian time adding to a 1.1% gain on Monday in thin holiday trading.
Commenting on this, Will Sungchil Yun, a commodities analyst at VI Investment Corp said- “The market is starting to witness the effect of output cuts along with a reduction in inventories, while the global economy is on its path to recovery. Still, there’s caution with the absence of a cure for the pandemic as well as the possibility of a second wave of infections.”
The energy market’s bullish run was boosted by comments from Russia which reported that its oil output had nearly plunged to its target of 8.5 million barrels per day for May and June. Daniel Hynes, a senior commodity strategist at Australia and New Zealand Banking Group, told CNBC that “there’s definitely a feeling those cuts have come through as well as you could expect. “With economies restarting, the focus definitely is on the improvement in the fundamentals, rather than what seemed like a complete collapse in demand only a few weeks ago.”