- Crude Oil Rises to Three Months High Ahead of Cuts Extension
Oil prices hit a three month high on Tuesday during the Asian trading session as investors and traders remain optimistic about production cuts extension.
OPEC and allies, together known as OPEC plus, are expected to meet this week to discuss the extension of 9.7 million barrels per day cuts agreed in April (for May and June) to further balance the global oil market and artificially support prices.
Brent crude oil, against which Nigerian oil is priced, rose to $39.53 per barrel on Tuesday at around 10:30 am, up from $15.93 per barrel it traded in April during the peak of COVID-19 pandemic.
While the US West Texas Intermediate oil increased from -$37 to $36.31 per barrel.
“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.
According to a Reuters report, the current agreement of 9.7 million barrels per day cuts was for May and this month. However, unverified comments pointed to a likely scale back to about 7.7 million barrels per day from July to around December of 2020.
The source said Saudia Arabia, the group’s largest producer, has been leading the talks for the extension.
Still, experts believe Moscow could once again be a stumbling block and push back given the severity of COVID-19 on the nation’s economy.
Russia had previously pulled out of the whole agreement to focus on revenue generation and support its falling economy before President Donald Trump intervened at the peak of the global pandemic.
“Russia will be the key obstacle in any extension, and they are unlikely to agree on any extension which goes beyond a couple of months,” said analysts at Dutch bank ING.
