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Nigeria fails to meet OPEC quota as oil price soars near $76 a barrel

Oil prices rose further Thursday, but cash strapped Nigeria is again facing the curious dilemma arising from its failure to pump out enough crude to meet the country’s OPEC.

Thursday’s price surge extends the strong gains overnight with fuel demand growing and crude stocks declining as production remains hampered in the US Gulf of Mexico after two hurricanes.

Nigeria suffers from the twin crises of foreign exchange shortage and collapse in government revenues but persistent policy failures mean its oil industry has remained in virtual doldrums for years.

Reports say the improving international market was also supported by a broader switch back into risk assets as concerns eased over a potential default by huge property developer China Evergrande and the possible fallout on the world’s second-largest economy.

Read Also: Oil near $75 on US inventories as Nigeria, OPEC struggle to meet supply quota

US West Texas Intermediate (WTI) crude futures rose 13 US cents, or 0.2%, to $72.36 a barrel at 1.43am GMT, while Brent crude futures rose 17c, or 0.2%, to $76.36 a barrel.

Both benchmark contracts jumped 2.5% on Wednesday after data from the US Energy Information Administration (EIA) showed US crude stocks fell by 3.5-million barrels to 414-million barrels in the week to September 17, the lowest since October 2018, in a bigger drawdown than analysts had expected.

“Oil fundamentals remain constructive, particularly in the US,” ING commodities strategists said in a note.

In a sign of strong fuel demand as travel bans ease, east coast refinery utilisation rates rose to 93%, the highest rate since May 2019, EIA data showed.

ANZ Research said market sentiment is also being supported by surging natural gas prices.

“Supply shortage of gas could encourage power utilities to shift from gas to oil if winter turns out to be colder this year,” ANZ analysts said in a note.

The rise in oil prices came even as the US dollar hit a one-month high after the US Federal Reserve signalled rate hikes could come in 2022, more quickly than expected.

Oil prices typically fall when the dollar rises as a stronger greenback makes oil more expensive for holders of other currencies.

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