Brent, the benchmark for Nigeria’s crude oil, is moving towards $70 a barrel, less than 24 hours after the Organisation of Petroleum Exporting Countries (OPEC) and allies agreed to keep production levels unchanged.
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On Friday morning, international benchmark Brent crude rose 5.4 percent to $67.85 a barrel as at 8.am Nigerian time, while US West Texas Intermediate (WTI) crude futures stood at $64.85, around 1.60 percent higher after OPEC’s meeting late Thursday.
Reacting to Thursday’s meeting, Goldman Sachs is now even more bullish on oil, expecting Brent crude prices to hit $75 a barrel in the second quarter of 2021, on the back of faster market rebalancing, lower expected inventories, and traders hedging against inflation.
In a note on Friday, cited by S&P Platts, the investment bank’s analysts forecast Brent crude prices reaching the $75 a barrel mark during the second quarter of this year, thus lifting its previous Q2 and Q3 forecasts by $10 per barrel.
“Faster re-balancing during what was expected to be the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast,” said Goldman Sachs.
For Africa’s biggest oil producer, a signal of higher oil price is always a blessing in terms of improved earnings. However, it might end up becoming a problem for the nation’s downstream sector, which still allows the price of petrol to be remotely controlled.
If oil exceeds the $70 mark, Nigerians would have to prepare for higher pump prices of PMS of at least N200 a litre in the coming weeks, without subsidy from the Nigeria National Petroleum Corporation (NNPC).
