Demand optimism drives crude oil above $70

Brent crude, the global oil benchmark, on Tuesday, topped $70 per barrel on the back of an improved demand outlook.

The global benchmark added as much as 1.1 percent reaching its highest since March 8, while U.S. crude futures briefly topped $67 a barrel. The global benchmark has not had a sustained period above $70 since 2019.

Crude oil price had suffered a huge decline globally following the impact of the coronavirus pandemic.

The decline in oil prices affected several economies globally, particularly countries like Nigeria which depend largely on crude oil earnings.

Although crude oil accounts for eight percent of Nigeria’s gross domestic product (GDP), it contributes over 90 percent of Nigeria’s foreign exchange earnings.

Oil prices have been on a tear on the back of gradual global recovery and vaccine roll out.

The 2021 budget, which was signed by the President Muhammadu Buhari on December 31, 2020, was based on an oil price benchmark of $40 per barrel and a production level of 1.86 million barrels per day.

Meanwhile, the Wall Street bank had projected that Brent prices will reach $70 per barrel (bbl) in second quarter of 2021 from the $60 previously projected.

Goldman Sachs, a US investment bank and financial services company, had also projected that oil prices will rebound to $75 by the third quarter of 2021.