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.
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).