• Wednesday, April 17, 2024
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BusinessDay

Oil gains as markets tighten on robust global demand

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There is yet brighter prospects for Nigeria’s fiscal position as oil closed higher Thursday amid expectations that recovering demand from the U.S. to India and Europe will further tighten global crude markets.

In London Brent rose to $73.75 a barrel while futures in New York climbed as much as 1.9% on Thursday after posting the biggest gain in three months on Wednesday.

Gasoline demand is essentially back to normal in many of the biggest oil-consuming countries, with road traffic data showing a similar trend.

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Europe’s air traffic rose over the past two weeks, with close to two-thirds of flights as the same period in 2019. The market recovery has spurred China to supply crude from its strategic reserves to local refiners in a bid to cool prices.

“The market clearly is more concerned about the supply-demand deficit being in deficit, and that the growth will continue, and that we’re under-supplied in the near term,” said Rebecca Babin, senior energy trader at CIBC Private Wealth, US.

Oil has rebounded after a nearly 8% loss on Monday as fears around the delta variant and its impact on economic recovery shook broader markets.

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The price plunge came just after a weekend meeting of OPEC+, at which the 23-nation alliance led by Saudi Arabia and Russia finalized plans to restore halted production.

“It’s just not enough oil,” said John Kilduff, a partner at Again Capital LLC. “The 400,000 barrel-a-day increase monthly is not going to get the job done and you’re going to see these inventories globally continue to tighten and tighten.”