Oil prices continued their ascent on Friday amid signs of supply cuts, putting Brent futures on track to book their best week in more than two years.
Brent, the international benchmark, surged 4.1 per cent in recent trading to hit $58.23 a barrel. That equates to an 11.6 per cent rally this week, the highest since December 2016 and helping to reverse some of the price collapse which got alarm bells ringing in Nigeria and other heavily oil dependent economies.
Nigeria’s 2019 budget was prepared with government revenues indexed to an oil benchmark price of $60 a barrel on the basis of the high of $85 which Brent attained on October 3.
On Friday, West Texas Intermediate crude looked to end the week with strong gains, rising 4.3 per cent to $49.13 a barrel. For the week, US oil futures are up 8.3 per cent for the best weekly mark since April 2018.
The oil market limped into 2019 after worries of a global supply glut sent prices swiftly tumbling into a bear market, dropping more than 20 per cent from four-year highs recorded in October.
Brent remains well below its high of nearly $87 a barrel, though prices have swung higher in recent sessions as traders reacted to data showing weaker OPEC production and declining inventories.
Surveys conducted by Bloomberg and Reuters this week indicated that OPEC, led by Saudi Arabia, reduced its oil output in December, before the start of planned production cuts this month.
“Despite the demand-side concerns, oil has received some support as supply cuts announced by Opec begin,” said Dean Popplewell, vice-president of market analysis at OANDA.
The American Petroleum Institute said late Thursday US crude supplies narrowed by 4.5m barrels during the week ending on December 28.
On Friday, the US Energy Information Administration said domestic stockpiles were roughly flat, growing by 7,000 barrels over the prior week and defying expectations for a drawdown of 3.1m barrels.
Meanwhile, hopes of progress in trade talks between the US and China, sparked by news that American officials are scheduled to visit China next week, fuelled a broader market rally to close the week.
The S&P 500 energy sector advanced more than 2 per cent to help lead stocks higher.
By our Reporter
