Oil prices jump over $50
Brent crude oil price rose above $50 per barrel (bbl) on Thursday for the first time since oil price slumped in early March, as hopes of a faster demand recovery after the release of COVID-19 vaccines underpinned a huge rise in U.S. crude inventories that showed there was still bulk supply available.
As of 5:09 pm (Nigerian time) on December 10th, 2020, the Oil price was trading at $50.97 per barrel, on track to settle at $51/bbl for the day. In the previous session, Brent crude firmed up by settling at $48.86/bbl while WTI closed at $45.52/bbl.
Oil prices were boosted by Canada approving the Pfizer-BioNTech vaccine, joining the UK, as the second country to approve the vaccine worldwide. The United States is also waiting for approval from the U.S. Food and Drug Administration(FDA) on whether to recommend BioNTech’s coronavirus vaccine for emergency use.
Swifter-than-expected vaccine distribution plans sent positive sentiments to the oil market despite the EIA reporting on Wednesday that there was a massive crude oil inventory build-up of 15.189 million barrels for the week to December 4. The rise in crude inventories came close to the largest crude oil build-up ever, which was recorded earlier this year for the week ending April 10, when the U.S. Energy Information Administration(EIA) reported a 19.25 million barrel stock up.
Ever since the first vaccine news spread, oil has recovered from historic lows reached in April 2020 when the pandemic dented demand, leaving OPEC and allies, known as OPEC plus to make record supply cutbacks.
Starting from January 2021, OPEC plus will further ease its supply restrictions by adding an extra 500,000 barrels per day to the global oil market, the easing is expected to be more gradual than earlier agreed, to provide additional market support.
A Bit of Good and Bad News For Nigeria
The good news for Nigeria is that the oil price hike would improve the external dollar earnings of the country, thereby improving Nigeria’s depleted foreign reserves. The bad news is that the domestic pump price of premium motor spirit (PMS) would rise a few notches.
The rise in prices would be frowned at by the Oil Marketers who have kicked against a N5.00 reduction in PMS price by the Federal government, hoping this would be the right time to maximize their profit, after deregulation of the sector.
Analysts note that an agreement between the Federal Government and oil marketers is imperative to determine if the rise would lead to an increase in PMS retail pump price or that the government would step in to ease the burden on drained Nigerians
