Brent crude oil prices trade nearing $80 a barrel, cheering news for Nigeria

Brent crude oil was up in London, climbing for a fourth day amid tighter supplies and a strong appetite for riskier assets like crude oil, as well as high hopes for an economic recovery following COVID-19. After reaching a two-month high on Thursday, Brent oil futures edged near $77 a barrel on Friday, closing at their highest level since October 2018. A further rise in crude oil prices will boost Nigeria revenue and foreign exchange position. Nigeria depends on crude oil sales for bulk of its revenue. Federal, States and Local government on monthly basis share from the federation account revenue from oil sales. 

There seems to be no end in sight to crude prices, as they are headed upwards. Taking risks at an excessive rate. Additionally, data from the U.S. Energy Information Administration (EIA) reveal U.S. East Coast refinery capacity utilisation has reached 93%, the highest level since May 2019.

The supply of crude oil in the United States dropped to its lowest level in almost three years this week, as hurricanes Ida and Nicholas caused lower inventories. A Chinese government sale of state reserves earlier in the day temporarily devalued the black liquid. A source with direct knowledge of the auction said PetroChina and private refiner and chemical producer, Hengli Petrochemical purchased four cargoes totalling about 4.43 million barrels.

In addition to declining output due to underinvestment or maintenance delays caused by COVID-19, some members of the Organisation of Petroleum Exporting Countries (OPEC) and allies (OPEC+) have also been challenged to raise output. In the meantime, American refiners continue to get their supply of U.S. Gulf crude from Iraq and Canada, while Asian buyers are switching to supplies from oil producers in the Middle East and Russia.