The international oil benchmark, Brent crude, rose more than two per cent on Tuesday, hitting a 12-month high after major crude producers showed they were reining in output roughly in line with their commitments.
Brent crude, against which Nigeria’s oil is priced, was up $1.27, or 2.3 per cent, at $57.62 a barrel by 1320 GMT, its third straight day of gains and the highest levels since late February last year, according to Reuters.
The United States benchmark, West Texas Intermediate, gained $1.2, or 2.2 per cent, to $54.75, a level last seen in early March 2020.
Crude production by the Organisation of the Petroleum Exporting Countries (OPEC) rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.
Also, voluntary cuts of one million barrels per day by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March.
“With OPEC and its allies (OPEC+) endeavouring to keep global oil production below demand, we expect petroleum inventories to keep falling,” UBS said in a note.
“With inventories starting to drop in 2H20, the structure of the futures curve has shifted to become downward sloped. This is attracting investors.”
The investment bank forecast Brent would reach $63 per barrel by the second half of this year and $65 by the first quarter of 2022. Goldman Sacks said it expected the benchmark to reach $65 a barrel by July.
In another development, ExxonMobil on Tuesday posted its first annual loss as a public company as the COVID-19 pandemic hammered energy prices and it reduced the value of its shale gas properties by more than $20bn in the fourth quarter.
The company reported a net annual loss of $22.44bn for 2020, compared with a full-year profit of $14.34bn in 2019.