Oil Price Surges As COVID-19 Lockdown Eases

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Energy specialist in Nigeria is doubtful of the sustainability of current rise in the prices of crude oil, as Brent rose to $35.14 per barrel, while Bonny Light traded for $33.92 gaining about $4.11. While the other grades of Nigeria’s crude, Brass River, and Qua Iboestood at $35.20, some experts charge the Federal Government to cautiously study the trend before making decisions.

Surging to two-month highs, the current growth has been linked to increasing signs of a rebound in oil demand, as the easing of lockdowns from the outbreak of Coronavirus takes effect across the world.

Indeed, the reopening of the economy in world’s top oil importer, China has pushed its demand back to pre-coronavirus levels, a report by Bloomberg said, even as the price increase comes on the backdrop of accelerated production cuts from all oil producers.

Reportedly, refineries in China had improved their run rates by 11 per cent in April, thanks to easing of lockdown, as the refiners operated with 13.1 million BPD run rates in April. The rate was higher than the average for the same month in 2019.

At about 3:35 pm yesterday, U.S crude; WTI also saw June contract expiring on today trading at $33.15, the highest level since the second week of March.

Famous economist, SegunAjibola, noted that easing of lockdown would continue to bring growth in global demand for key production inputs such as oil and gas.

He said the oil price rebound was good news, adding that a post-pandemic era is usually laced with attempts at reconstruction to regain lost ground.

“So we expect an increase in global demand for key production inputs such as oil and gas. We don’t know whether that is what is driving the upward swing in the price of Brent with delivery in 90 day time. Or whether it is still a reflection of high wire politics and the intrigues we have been witnessing in recent times. We pray for the sustenance of the price increase. It is a good omen for Nigeria,” Ajibola said.