By Udeme Akpan
Barely 48 hours after the release of the Organisation of Petroleum Exporting Countries, OPEC, Monthly Oil Market Report, MOMR, April 13, 2021, the price of Nigeria’s Bonny Light, has risen further to $65.01 per barrel.
Before the report, the price of the crude had hovered at $61.50 per barrel, due mainly to the prolonged Coronavirus pandemic, which has scuttled demand in many countries, especially China, and India, which are Nigeria’s major oil buyers.
But the latest MOMR, which painted a fairly good prospect of the market, stated: “For 2021, additional US stimulus measures and accelerating recovery in Asian economies are expected to continue supporting the global economic growth forecast, which is now revised up to 5.4%.
“However, this forecast remains clouded by uncertainties, including, but not limited to, the spread of COVID-19 variants and the speed of the vaccine rollout. In addition, sovereign debt levels in many regions, inflationary pressures, and central bank responses are key factors to monitor.
“After a contraction of 3.5% in 2020, US economic growth in 2021 is now expected to reach 5.7%. The Gross Domestic Product, GDP growth forecast for the Euro-zone in 2021 remains at 4.3%, which follows a contraction of 6.8% last year. Japan’s GDP growth forecast remains at 3.1% for 2021, after a contraction of 4.9% in 2020.
“Following growth of 2.3% in 2020, China’s GDP is forecast to increase by 8.4% in 2021. India’s 2021 GDP growth forecast is revised up to 9.8%, compared to a contraction of 7% in 2020. Brazil’s growth forecast remains unchanged at 3.0%, with government estimates showing Brazil’s economy contracted by 4.1% in 2020. Russia’s growth forecast for 2021 remains at 3%, after contracting by 3.1% in 2020.
“The global oil demand contraction in 2020 is revised lower by about 0.1 mb/d compared to last month’s MOMR, now showing a contraction of about 9.5 mb/d y-o-y, with total world oil demand at 90.5 mb/d.”
On demand, it added: “In 2021, world oil demand growth is expected to increase by about 6.0 mb/d y-o-y, representing an upward revision of about 0.1 mb/d from last month’s report. Indeed, oil demand in the 2H21 is projected to be positively impacted by a stronger economic rebound than assumed last month, supported by stimulus programmes and a further easing of COVID-19 lockdown measures, amid an acceleration in the vaccination rollout, largely in the OECD region.”
However, at the current price of $65.01, Nigeria is not under pressure to fund its 2021 budget, which was benchmarked on $40 per barrel, and 1.8 oil output, including Condensate.
Nevertheless, other crudes, especially Brent, OPEC Basket, and West Texas Intermediate, WTI, also witnessed rose from $61.30, $59.20, and $55.60 to $68.40, $66.70, and $61.60 respectively, on April 16, 2021.