Brent futures is approaching $60 per barrel on Monday as oil prices continue to rally, boosted by supply cuts from OPEC and its allies amid economic revival hope.
The pledge of additional supply cut by Saudi Arabia in February and March coupled with reductions by other members of the OPEC+ including Russia, is helping to balance global markets and support prices.
At 0520GMT on Monday Brent futures traded as high as $59.97 per barrel. The last time Brent futures hit $60 was on on February 20, 2020.
The US oil futures Western Texas Intermediate traded at $57.47 per barrel at 0500GMT, the highest since January last year.
Nigeria Bonny Light trade at $58.93 per barrel, a 2.03% increase.
Saudi Arabia sent a “very bullish signal” last week when it kept monthly crude prices to Asia unchanged despite expectations of small cuts, OCBC’s economist Howie Lee said world’s top exporter.
“I don’t think anybody dares to short the market when Saudi is like this,” he added.
A weaker dollar against most currencies on Monday also supported commodities, with dollar-denominated commodities becoming more affordable to holders of other currencies Reuters reported.
However, high oil prices will be an incentive for increased oil supply especially from the US.
The U.S. oil rig count, an early indicator of future output, rose to its highest since May last week, according to energy services firm Baker Hughes Co.
“Once you hit $60 a barrel, any oil production out there is profitable, and the incentive for oil producers to hold back erodes real fast,” Torbjörn Törnqvist, chief executive at one of the world’s largest independent oil traders, told Bloomberg on Friday.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
