Oil recovery hinged on vaccinations as OPEC+ targets new quota
01 January 2021 |
3:12 am
The possibility of oil prices going beyond the $50 a barrel average price appears to be dim as a result of the mutating strains of the coronavirus that threaten economic and oil demand recovery with lockdowns
A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
The possibility of oil prices going beyond the $50 a barrel average price appears to be dim as a result of the mutating strains of the coronavirus that threaten economic and oil demand recovery with lockdowns and travel restrictions, 39 experts polled by Reuters has said.
The analysts noted that until critical masses of economically active people get vaccinated, oil prices are likely to remain under pressure.
For 2021, the Nigerian government is basing its benchmark at $40 per barrel, up from $30 from 2020, when the country had to revise the 2020 budget oil benchmark from $57 per barrel to $30. Its production output was also revised from approximately 2.1 million barrels to 1.7 million per day.
According to the analysts, average expectations for Brent Crude prices for 2021 stand at $50.67 per barrel, up from a forecast of $49.35 a barrel in the November Reuters poll, but below the $51.15 price at which Brent Crude traded at 5:25 pm local time.
Also, the analysts raised their forecast for the average price of West Texas Intermediate (WTI), expecting the U.S. benchmark to average $47.45 a barrel in 2021, compared to $46.40 in the November poll. Early on Thursday, WTI Crude prices were down by 1.01 percent at $47.91.
Besides, OPEC+ is scheduled to meet on January 4 to discuss how much the group will produce in February and beyond. The group is also set to meet monthly to determine the production quotas for the following month, after weighing market conditions.
According to Reuters’ sources, OPEC’s compliance for November reached 104 per cent. Compliance for OPEC’s allies—a group that includes Russia—reached just 95 per cent compliance. Combined, the overall compliance rate for November for OPEC+ was therefore 101 per cent, almost exactly the same as the group’s compliance in October 2020.
Another factor to watch in 2021 will be the OPEC+ oil production policy and whether the cartel and its Russia-led allies will ease the cuts before demand can absorb the additional supply.
The new COVID-19 strain—first identified in the UK—and the soaring cases across the UK, other parts of Europe, and the United States are likely to cap oil price gains in the early months of 2021, while positive news on the vaccine front is set to put upward pressure on prices.
The negotiations about how much oil to produce given the prospects for slackened oil demand have not been without difficulty. Russia has consistently been supportive of increasing oil production, while Saudi Arabia has been more cautious in its approach—or perhaps more aggressive with the production cut plans—as the oil-dependent nation remains the swing producer of the group.
Tensions also arose between the UAE in the run-up to the previous meeting, and other OPEC members, too, have expressed a desire to ramp up production and end the painful quotas.
Related
1 day ago
The Managing Director of Nigeria Breweries Plc, Hans Essaadi, said the fact that the naira has shown some appreciation against the dollar in recent weeks has had little or no impact on input cost.
1 day ago
The Ooni of Ife, Oba Adeyeye Enitan Ogunwusi, Ojaja II, said the recently-launched Tingo Cola and Tingo Electric energy drink would not only deepen local content principles and compete locally with other exportable brands but would also provide employment to hundreds of youths in the country.
1 day ago
Despite the abundance of raw materials needed for self-sufficiency and the production of pulp and paper in the country, Nigeria is still missing out on the massive income to be made on the production, sale and export valued at $360 billion.
1 day ago
The Chartered Institute of Taxation of Nigeria (CITN) has warned political leaders against abuse of taxpayers' money, stating that collecting tax revenue from taxpayers without using it judiciously weakens the country's taxation system.
1 day ago
To halt the fresh panic building over the fate of the naira, the Central Bank of Nigeria (CBN) is set to disburse another tranche of liquidity intervention to 1,583 Bureau de Change operators.
1 day ago
Oil-producing communities in Niger Delta have called for transparency and accountability in the ongoing divestment of oil and gas assets in the region.
1 day ago
With a headline inflation rate of 33.2 per cent and food inflation of 40.01 per cent, chiefly blamed on the high cost of transportation, which has continued to rise, it might take a while for respite to come.
1 day ago
Following the recent appointment of new management and board for the Securities and Exchange Commission (SEC), shareholders have stressed the need for the members to accelerate the development of the capital market by improving the response time to complaints and monitoring listed firms' compliance with extant rules.
2 days ago
The price of Liquefied Petroleum Gas (LPG), also known as cooking gas, has continued its upward swing rising by 7.1 per cent in the last month, thus making life more difficult for Nigerians who are struggling with food inflation.
2 days ago
Various fibre cuts may have cost affected telecoms operators, especially MTN and Airtel, about N27 billion ($23 million) in repairs last year. To reduce the cost of the operations of the firms, the Federal Government through the Ministry of Works
×
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
0 Comments
We will review and take appropriate action.