Following speculations of possible additional oil production cut by the Organization of Petroleum Exporting Countries, OPEC, Brent crude oil, against which Nigerian oil is priced, rose by 0.7 per cent to $81.18 a barrel while U.S. West Texas Intermediate crude saw a similar increase to $76.40 a barrel.
The positive momentum follows a four-week decline in prices driven by reduced concerns over Middle East supply disruptions caused by the ongoing Israel-Hamas conflict.
The 4 per cent increase in the prices of both Brent and WTI on Friday came after reports suggested OPEC+, comprising OPEC and allies like Russia, might consider additional oil supply cuts during their upcoming meeting on November 26.
Goldman Sachs analysts said, “Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in time spreads, and higher-than-expected inventories.”
While the baseline forecast assumes existing production cuts persist into 2024, with Saudi Arabia’s unilateral cut extended, market analysts anticipate potential further increases.
IG analyst Tony Sycamore suggested WTI prices might approach $80 a barrel if OPEC+ announces deeper cuts.
Investors are also monitoring potential disruptions in Russian crude oil trade due to sanctions on ships involved in transporting Sokol crude to India.
Also, the U.S. energy sector saw an increase in oil and gas rigs last week, indicating a potential uptick in future output.
The ongoing situation in the Middle East and developments in Russian fuel exports add complexity to the global oil market.