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Tuesday, 19 February 2019 00:00

Oil increases to $66 on U.S, China deal, others

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Oil prices rose yesterday, extending last week’s gains amid rekindled hopes that the United States (U.S.) and China could reach a trade deal. Also, there is growing signs of a tightening market, driven by the Organisation of Petroleum Exporting Countries (OPEC’s) production cuts and U.S. sanctions on Iran and Venezuela.

WTI Crude  traded up 0.80 per cent at $56.43, while Brent Crude eased off earlier gains to trade down 0.02 per cent at $66.24.

Economic analysts say this is a healthy devleopment for Nigeria’s budget 2019 currently under the consideration of the National Assembly. The budget has $60 as its benchmark. The extra cash will hopefully enable the Federal Government to fund the massive infrastructure propjects in Africa’s largest oil producing country with monolithic revenue base.

Still, Brent Crude is currently on track for its best performance in a first quarter of a year since 2011. So far into 2019, oil prices have gained around 25 per cent.

On Friday afternoon, oil prices reached their highest in three months and the highest so far this year, with Brent Crude exceeding $65 a barrel for the first time since November 2018. Bigger-than-expected cuts from OPEC and its de facto leader and largest producer Saudi Arabia helped push prices up. This bullish signal combined with renewed optimism coming from both the U.S. and China that they had made some progress in last week’s trade talks.

Representatives of the world’s two largest economies will be meeting in Washington this week for another round of trade talks and the markets, including the oil market, are currently banking that the worst of a trade war could be averted

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