June 11, 2023

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2020 Crude Oil outlook as price hits all quarter high of 68.49dpb


The 2020 crude oil market outlook has come with moderation amidst promising expectation following the current rise in prices and the obvious undermining by Non-OPEC members Oil cut measure to head off supply surplus.

The global price for Bonny Light (the Nigerian crude) has climbed to 68.49dpb gaining 0.85 dollar (1.26%) at the close of the week rising from 67.64dpb

This is the highest the black gold has done since October having done as low as 58.49dpb at the onset of the quarter. The commodity gradually rose from 67.05dpb in the previous week, however not outside expectation.

Meanwhile, Brent Crude gradually rose from 65.42dpb over the last week to 66.87dpb before loosing 0.56 dollars to currently sell at 66.41dpb.

There is every justification for anticipated further rise in price after the last cut by OPEC+ at the beginning of the month which saw as much as 500,000bd further deducted from world supply. It was a necessary effort to head off supply surplus in the coming year as recommended by the OPEC’s Joint Ministerial Monitoring Committee (JMMC) at the biannual meeting in Vienna.

However, while analysts expect the current rise in price to extend to the first quarter of 2020, global supply is also predicted to gradually rise as Non-OPEC members have continue to exhibit tendency to upscale their supply. As noted by Nick Cunningham of Oilprice.com quoting JBC Energy, that “mature areas have seen small and large scale project additions, leading to multi-year highs in the Norwegian North Sea, Gulf of Mexico, and Brazil,”. Mexico and China have equally been observed recovering their yearlong decline in production while ExxonMobil just have started production at its Liza field in Guyana, adding 120,000 bpd expecting to ramp up production to 750,000 bpd over the coming years.

Consequent of these challenges surrounding Non-OPEC compliance with the OPEC+ oil cuts, analysts are forced to apply moderation in prediction for the coming year. 2020 price prediction pegs Brent crude at average of $64.25pb for most of the year, excluding a couple of peaks above 70 dollar a barrel and troughs of below 60 dollar while WTI is to average at 58.50 dollar per barrel, according to polls by Bloomberg.

By and large, countries like Nigeria who need the sustained rise in crude price will hope for a promising 2020. President Buhari’s had earlier in the month at the signing of the 2020 budget noted global oil outlook as a basis for budget performance. The budget is based on an oil price benchmark of $57 per barrel, a daily oil production estimate of 2.18mbpd at an exchange rate of N305 per US Dollar.

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