The international oil benchmark, Brent crude, rose above $48 per barrel on Wednesday, signaling hope for oil dependent countries like Nigeria.
Brent, against which Nigerian’s oil is priced, rose for a fourth straight session extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.
It rose by $0.51 to $48.37 per barrel as of 7:00 pm Nigerian time on Wednesday, having risen almost four per cent in the previous session as the market shrugged off an industry report showing United States crude stockpiles rose more than expected.
The US benchmark, West Texas Intermediate, gained 24 cents, or 0.5 per cent, to $45.15, after rising more than four per cent on Tuesday.
“Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia,” said UBS oil analyst, Giovanni Staunovo.
“We maintain our bullish outlook for next year and target Brent to hit $60 per barrel at the end of 2021,” he added.
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AstraZeneca said on Monday its COVID-19 vaccine was 70 per cent effective in trials and could be up to 90 per cent effective, providing another weapon in the fight to control the pandemic.
“The recent depreciation of the US dollar has helped temper the impact of surging oil prices for some of the world’s largest consumers of energy,” said Stephen Brennock of broker PVM.
Brent has moved into backwardation, a market structure in which oil for immediate delivery costs more than supply later. Backwardation encourages inventories to be drawn down.
The premium at which Brent crude futures for February delivery were trading above January stood at 13 cents, the highest level since July.
“Positive vaccine news and swift deployment views are behind a significant part of this move in the curve, supported by increasingly firm beliefs by the market that OPEC+ will extend its current output targets for Q1 2021,” said Rystad Energy’s analyst Bjornar Tonhaugen.
OPEC+, made up of the Organisation of the Petroleum Exporting Countries and allies including Russia, is expected to sustain its production cuts into 2021 after a meeting set to start on Nov. 30 following technical talks this week.
