The price of Brent crude, on Monday, rose to hit a 2016 high of $40 per barrel. It was the sixth rise in consecutive trading days in a row.
According to reports, buyers were encouraged by talks that the Organisation of Petroleum Exporting Countries (OPEC) was working at increasing prices after a sell-off that has lasted nearly two years, while on the other hand, the upward movement of prices were attributed to data showing a smaller-than-expected build-up in stockpiles at the Cushing, Oklahoma delivery hub for United States crude futures.
The new crude high is above Nigeria’s 2016 budget benchmarked of $38, which was projected in December 2015 even when price of Brent stood at about $34 per barrel.
However, experts are still of the opinion that despite the rebound in crude price, the global crude glut remained a huge challenge.
Brent, the global benchmark crude, rose by $2.18 at $40.90 on Monday, while its session peak was $41.04, the highest since December 9, 2015. United States’ WTI crude was also up $2 at $37.92 a barrel, after hitting a two-month high and closing at $38.11.
According to reports, traders believe the price gains picked up after market intelligence firm, Genscape reported a smaller-than-expected rise in crude stockpiles at the Cushing, Oklahoma delivery hub.
This is even as major OPEC producers are privately looking at new oil price equilibrium of $50.
It would be recalled that the Minister of State for Petroleum, Dr. Ibe Kachikwu, had said last week that he expected a dramatic upsurge in prices at a meeting slated for Russia on March 20, adding that the cartel, OPEC members and Russia would target a new oil price equilibrium of $50 a barrel.
Less influential members such as Venezuela and Angola have reportedly referenced specific prices, generally in the vicinity of $70 to $80.
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