OIL climbed to a five-month high in London, topping $45 a barrel after United States (U.S.) industry data showed a decline in the nation’s stockpiles.
Brent for October settlement rose to $45.45 a barrel while West Texas Intermediate (WTI) for September delivery rose $1.02 to $42.72 a barrel
Brent futures gained fourth day gain is the highest price since March 6. The American Petroleum Institute (API) reported 8.59 million-barrel drop in crude inventories last week, according to people familiar with the figures.
President Muhammadu Buhari had signed into law the revised N10.8 trillion budget for this year passed by the National Assembly in June.
He said the revised Appropriation Act 2020 became necessary in response to recent developments, in particular, the COVID-19 pandemic.
Buhari said: “Crude oil prices in the world market declined sharply from a high of $72.20 per barrel in January 2020 to below $20 per barrel in April 2020, and have since remained around $40 per barrel.
“Nigeria’s crude oil production quota has been reduced as part of the efforts of the Organisation of Petroleum Exporting Countries (OPEC) to strengthen the oil market. Global trade has generally been disrupted as almost all economies were locked down for protracted periods in the wake of the COVID-19 pandemic.”
The international benchmark moved above its low from March 6 in European trading hours, closing a so-called price gap that was formed on that day, a move that traditionally leads to additional buying. Over the same period, West Texas Intermediate rose above its 200-day moving average for the first time since January.
Oil has resumed gains in recent days after rallying from a plunge below zero in April. The rising coronavirus infections have raised concerns about a sustained recovery in consumption.
Non-members of the Organisation of Petroleum Exporting Countries (OPEC+) is set to test the market by returning some supply this month after historic output curbs, but a persistently weaker dollar and the recovery in equity markets has helped the market draw out further gains.
“Oil prices are rising, pricing in what looks like a sizable decline in U.S. crude inventories,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
European equities and U.S. futures advanced on signs American lawmakers are making progress on an economic aid package, while the dollar continued to grind lower, adding further support to crude markets.
A Bloomberg survey shows U.S. crude stockpiles probably fell by 3.35 million barrels last week. That would be the third weekly decline in four weeks if confirmed by official data from the Energy Information Administration later on Wednesday. American shale drillers have signaled the end of output growth, with Diamondback Energy Inc.’s chief executive officer saying there are currently no market signals that such growth is needed.