Crude oil price hits $73.45 per barrel, highest in 6weeks

Brent crude oil prices on Monday rose to near six-week high, when the futures increased by 53cents or 0.7 per cent to $73.45 a barrel.

This development gives hope to Nigeria as the bulk of revenue comes from crude oil sales. Those gains came even though the Organization of the Petroleum Exporting Countries (OPEC) trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant.

OPEC said a further recovery would be delayed until next year when consumption will exceed pre-pandemic rates.

Although, the U.S West Texas Intermediate crude rose 71 cents, or 1.0 per cent, to $70.43. That puts Brent on track for its highest close since Aug. 3 and WTI on track for its highest close since July 30.

Report by Reuters quoted Nishant Bhushan, oil markets analyst at Rystad Energy stated, “Hurricane Ida’s impact is lasting more than the market expected and as some oil production capacity remains shut this week, prices are rising on supply not being restored and therefore not reaching refineries that have restarted operations quicker than producers,” Further disruption from bad weather could be around the corner, with the U.S. National Hurricane Center projecting Tropical Storm Nicholas will remain a storm as it scrapes along the South Texas coast on Monday and makes landfall near Corpus Christi later tonight.

In addition to the OPEC forecast, other bearish factors also held back oil price gains on Monday, including persistent worries about coronavirus on global crude demand, potential supply increases from planned releases of oil from strategic reserves in the United States and China, and the possibility Iran could be moving closer to selling oil to the world again.

A city in China’s southeastern province of Fujian has closed cinemas and gyms, sealed off some entries and exits to highways and told residents not to leave town as it battles a local COVID-19 outbreak. Traders noted China’s planned release of oil from strategic reserves could boost supplies available in the world the second-biggest oil consumer.

The U.S. government agreed to sell crude oil from the nation’s emergency reserve to eight companies including Exxon Mobil, Chevron and Valero, under a scheduled auction, to raise money for the federal budget.

Hopes of fresh talks on a wider nuclear deal between Iran and the West were raised after the United Nations atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running.