Oil price jumps above $52

The price of the international benchmark crude, Brent, shot up two per centMonday morning after the two largest oil producers, Saudi Arabia and Russia both said the subsisting crude production cut would be extended from the middle of this year until March 2018.

Brent is currently trading at $52.03 a barrel benefiting from significant positive sentiments driving the global oil market and such upward price movement will benefit Nigeria where recent improvements in the economy have been attributed to better oil revenue prospects.

Saudi & Russian energy ministers released a joint press release calling for the current level of production cuts to be extended for 9m, lasting up until 1Q18.

Extending the curbs at already agreed-upon volumes is needed to reach the goal of reducing global inventories to the 5-year average, the energy ministers of the world’s biggest oil producers said in a joint press conference in Beijing.

They will present their position ahead of a meeting between OPEC and other nations that are part of the agreement later this month in Vienna.

In a note Monday morning Goldman Sachs said most investors its analysts spoke to over the last week were broadly expecting a 6m barrels roll over and this reflects a positive surprise, and with net speculative positioning now at much healthier levels following the pull back, risk/reward for oil prices is skewed higher.

Analysts at Goldman said they believe a rally that pushes 12m forward prices high enough to give marginal high yield producers an incentive to produce (>$55/bl WTI) would increase the risk of shale-drive oversupply in 2018.

 

Nigerian oil output averages 1.45m bbl/day in April, said Petroleum Resources ministry spokesman Uche Adighibe and there is now a chance Nigerian exports could ramp >300kbpd as pipeline disruptions ease – the resumption of the larger pipeline at Qua Iboe that has been halted since July, would allow 12 cargoes of 950k bbls to flow (c. 380kbd), from 7-10 cargoes currently.

Separately, Shell indicated that the Forcados pipeline (200kbpd) was still under force majeure.says by phone from capital, Abuja.