Oil prices rose for the second consecutive day on Friday with Brent (the international benchmark for Nigeria’s crude) climbing up further to $34.91 per barrel.
It had surged by 47% on Thursday and the further growth achieved yesterday was “the largest weekly percentage gain on record,” Reuters says.
The positive trend is a reaction to US President, Donald Trump’s hopes that Russia and Saudi Arabia will broker a deal to cut oil output next week.
It is widely anticipated that the OPEC will achieve up to 10% reduction in global oil production at the end of deliberations on Monday.
The global oil market has been at the mercy of a historic glut that kept sending crude prices on a free fall for days on complications in Saudi-Russia rift regarding production cut.
Coming down to $22 on Monday, Brent reached its lowest point in 18 years on the account of steep demand fall caused by lockdowns imposed by government around the world to contain COVID-19’s spread.
The price slump weeks compelled the Nigerian government to review its oil price assumption for the implementation of this year’s budget downward from $57 to $30.
Trump declared on Thursday he had held talks with Russian President, Vladimir Putin and Mohammed bin Salman, the Saudi Crown Prince during which they consented to slash total world supply by 10 million to 15 million barrels per day (bpd).
Faith Birol, Head International Energy Agency, is however optimistic that the proposed cut, even though substantial, will do little to improve market situation as global oil stocks are expected to by 15 million bpd this quarter.
“With a now discussed cut of 10 million bpd … the oil industry would get at least three weeks more room to prepare for hitting the wall when there are no more places to put the excess production,” said Per Magnus Nysveen of Rystad Energy.