The price of Brent crude monday rose for the sixth consecutive trading day in a row, hitting a 2016 peak of over $40 a barrel, as buyers were encouraged by talk that the Organisation of Petroleum Exporting Countries (OPEC) was targeting a higher anchor price after a sell-off that has lasted nearly two years.
The rise in oil prices coincided with comments by the President of Dangote Group, Alhaji Aliko Dangote, who advised Nigerians to stop viewing the low oil price environment as a setback, saying that the situation offers the nation an opportunity to diversify its revenue base.
Reuters reported that oil prices also got a boost from data showing a smaller-than-expected build-up in stockpiles at the Cushing, Oklahoma delivery hub for United States crude futures.
Despite the rebound in crude price, some analysts cautioned that the global crude glut remained a huge challenge. Global crude prices have risen more than 40 per cent since hitting 12-year lows less than two months ago.
The rebound from oil price lows of around $26 a barrel has also been driven by chart-related buying and asset rotation by investors that resulted in higher allocations into commodities such as oil and metals, as well as equities.
Brent, the global benchmark crude, rose by $2.18 at $40.90 yesterday, 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. Traders said price gains accelerated after market intelligence firm Genscape reported a smaller-than-expected rise in crude stockpiles at the Cushing, Oklahoma delivery hub.
Major OPEC producers are privately starting to talk about a new oil price equilibrium of $50, New York-based consultancy PIRA told Reuters.