Oil prices climbed on Monday, lifting Brent (the benchmark for Nigeria’s crude oil grades) above $50 per barrel amid optimism that a dispensation of coronavirus vaccines will boost global fuel demand while a tanker blast in Saudi Arabia caused some panic in the market.
Brent crude futures for February advanced by 67 cents or 1.3% to $50.64 a barrel by 08:30 West Africa Time just as U.S. West Texas Intermediate (WTI) crude futures for January rose 62 cents or 1.3% to $47.19.
Bonny Light, Nigeria’s premium oil grade, declined by $1.08 or 2.13% to $49.62 at the previous session. Qua Iboe, another major national grade, was up by $1.36 or 2.78% at $50.34 per barrel that same day.
Oil prices also climbed up amidst supply fear following reports that an oil tanker was hit by an external source in the process of offloading at Jeddah port in Saudi Arabia.
Virendra Chauhan, analyst at Energy Aspects, told Reuters “The market is assessing supply disruption from these incidents versus Iranian (supply) volumes coming back. So it’s unsurprising that oil prices are choppy.”
Brent and WTI have rebounded for six weeks in a row, their longest gaining streak since June.
The U.S. began its inoculation campaign against the COVID-19, stimulating the optimism that coronavirus curbs might end soon and raise demand at the world’s biggest oil consuming nation, with the possibility of improving oil prices.
Big European economies continued under lockdown introduced to control the spread of the pandemic, which has crippled fuel demand. Germany for instance, the fourth biggest economy in the world and the largest in Europe, is looking to introduce more stringent lockdown beginning from Wednesday to combat the pandemic.
The joint ministerial monitoring committee of the Organisation of Petroleum Exporting Countries (OPEC) and its Russia-led allies, a grouping called OPEC+, will meet on 4th January to study the market after their last resolution to restrict output increases to half a million barrels per day beginning from 2021.
Last week, oil and gas companies in the U.S. added the biggest oil and natural gas rigs in one week since January as producers continued to return to the wellpad, which could have implications for oil prices.
Two separate fire accidents happened at Qua Iboe crude oil export terminal and at an oil pipeline in Iran on Sunday but they were mostly contained.