Oil recovers towards $57 per barrel

Brent crude oil reversed its recurring losses to trade back towards $57 a barrel on Tuesday, which is a good development for Nigeria whose budget benchmark for 2015 is $53.

This has been attributed to the increase in Saudi Arabian oil production, which has risen close to an all-time high and a weaker dollar overshadowed by signs of slowing growth in China.

The US economy is slowing, which will weaken the US dollar. A weaker dollar supports oil prices because crude is transacted in dollars, making the commodity more affordable to holders of other currencies when the dollar falls.

Analysts believe that the rise may be further sustained by an increase in demand for oil as the United States enters the summer driving season.

Brent futures LCOc1 for May delivery traded up to 64 cents at $56.54, while U.S. crude CLc1 rose 60 cents to $48.05 a barrel.

According to the trading, gains are capped by data showing factory activity in China, the world’s second-largest economy and top oil importer, which slipped in March.

The Chinese data surge followed comments from OPEC kingpin Saudi Arabia that it was pumping around 10 million barrels of crude per day, which was above OPEC figures for February as the country needs a higher price to support its state-supported social programs.

The Saudis are widely seen as having worsened the rout in oil prices by refusing to cut production in order to boost prices at a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in November.

OPEC’s decision to fight for market share rather than cutting output had contributed to a halving in oil prices since June as the global surplus of oil supplies had grown.

Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide – including Nigeria’s Bonny Light. The cost of Brent crude has fallen about 50 percent since hitting a high in June.