4th December, 2020
Nigeria’s precarious economy may hit an upswing earlier than forecast as oil prices headed Friday for a fifth week of gains.
WTI Crude was up by 1.03 percent at $46.06, and Brent Crude was nearing the $50 a barrel mark, up 1.13 percent on the day at $49.25.
The rise in oil prices came after OPEC+ managed to seal a compromise deal over its oil production policy early next year, oilprice.com reported.
The group managed to present a united front of a unanimous decision after days of disagreements.
After days of debates, OPEC+ decided on Thursday that the group would add in 500,000 barrels per day (bpd) in January to its oil production quotas, which currently calls for a production cut of 7.7 million bpd.
The total production cut in January will now be 7.2 million bpd.
Future assigned quotas could rise or fall, and to determine those levels of oil production beyond January, OPEC+ ministers will hold additional meetings—one each month.
Although the OPEC+ group failed the deliver the most widely expected outcome—a three-month extension of the current level of cuts, the fact that the alliance managed to exit this week’s meeting whole and with some sort of a decision reassured the market that neither the alliance nor the cartel would be breaking, at least for the next month or so.
“With the expected vaccine driven recovery in global fuel demand, this deal will go a long way to ensure the price of oil remains supported until it can stand on its own feet without support.
Brent is likely to print $50/b sooner rather than later with already strong Asian demand eventually being joined by others once the Covid-19 cloud lifts,” John Hardy, Head of FX Strategy at Saxo Bank, said on Friday.
The collapse of oil prices and the general downturn in many sectors of the economy drove the Nigerian economy into recession in the third quarter, the second time in four years.