Brent Crude Oil Rises to $46 Per Barrel on Wednesday

Oil price rose on Wednesday after U.S. crude oil producers shut production in the Gulf of Mexico ahead of Hurricane Laura.

The Brent crude oil, against which Nigerian oil is priced, rose as high as $46.07 per barrel on Wednesday before pulling back slightly to $45.87 per barrel at 2:13 pm Nigerian time.

Last week, OPEC and allies lowered their projections for crude oil demand for the rest of the year by 9.1 million barrels per day, saying recovery remains slow amid rising global uncertainties.

However, with U.S producers shutting down production, supplies into the global market would drop, hence the reason for the surged in price.

“Overall, hurricanes may be limiting supply this week … but the market will soon again focus on the biggest hurricane of them all, COVID-19,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

While sustainability remains a concern, other factors like the surged in China’s crude oil imports, the slight improvement in China-US trade war and gradual reopening of economies are likely to sustain the price above $40 per barrel level in the near-term.

“The storm factor will remain a primary focus in the energy complex through the rest of this week, likely overshadowing tomorrow’s (Energy Information Administration) report as a significant price driver,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.