Oil Sustains Upsurge as Top Producers Lower Output

• Oil Sustains Upsurge as Top Producers Lower Output

Oil sustained bullish run this week after trading largely around $29 -$30 per barrel last week.

Brent crude oil, against which Nigerian oil is measured, rose from $29 per barrel it traded most of last week to $36.56 on Thursday after data shows US oil inventories declined by 5 million barrels last week.

The US West Texas Intermediate oil appreciated to $34.26 per barrel, up from around $21 per barrel it traded last week.

Top oil-producing nations have finally realised they need each other to rebalance the global oil market and support low oil prices following over a 60 percent decline in prices due to the COVID-19 pandemic. US producers, OPEC plus and other nations like Canada, Norway have reduced output in recent weeks to support global recovery and stimulate the commodity market.

“Global supply has been curtailed to a great degree,” said Rystad Energy analyst Paola Rodriguez Masiu. “We are on a clear path to a gradual recovery now.”

OPEC and allied have agreed to cut 9.7 million barrels per day in June while US producers have continued to shut down rigs as storage becomes an issue.

“It is now abundantly clear that the market is tightening and crude prices are rebounding as demand returns,” said analysts at JBC Energy.