• Wednesday, February 21, 2024
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Oil steamrolling to $100 a barrel but Nigeria missing at the party

Oil steamrolling to $100 a barrel but Nigeria missing at the party

Oil prices rose again on Friday and is set for a third weekly gain but Africa’s top producer Nigeria continues to face production challenges.

Hobbled by poor management, Nigeria has been unable to meet her OPEC quota for more than two years and continues to face severe FX and revenue crises with debt servicing burden wiping out nearly all of public earnings.

The price of oil is surging better than expected Chinese economic data and reports of record oil consumption showed.

Brent crude futures rose 62c, or 0.7 percent, to $94.32 as of 2.49am GMT, while US West Texas Intermediate crude (WTI) was up 71c, or 0.8 percent, at $90.87.

Both benchmarks were up about 4 percent  from a week ago.

China’s industrial output and retail sales grew at a faster-than-expected rate in August, suggesting that the recovery of the world’s second-largest economy from the Covid-19 pandemic was stabilising.

Data from the National Bureau released on Friday also showed oil refinery processing rose to a record 64.69-million tonnes in August, up 19.6% from a year earlier and equal to 15.23-million barrels per day (bpd).

Refining throughput surged as Chinese processors kept run rates high to meet summer travel demand and capitalise on strengthening margins for exporting to Asian consumers.

“Betting on oil is becoming a favourite trade on Wall Street. No one is doubting the Opec+ (oil-producing nations) decision at the end of last month will keep the oil market very tight in the fourth quarter,” Oanda analyst Edward Moya said.

The record China refining rates are occurring as output cuts by major producers Russia and Saudi Arabia are increasing worries about supply. The supply concerns have pushed both Brent and WTI to their highest since November.

The International Energy Agency said this week it expects Saudi Arabia and Russia’s extended oil output cuts to result in a market deficit throughout the fourth quarter.