The oil price rally went into overdrive after a surprisingly robust U.S. labor market report,” Ed Moya, analyst at New York’s OANDA, told Reuters referring to the impressive job numbers recorded in America, where about 2.5 million jobs were added, against analysts’ expectations for a loss of 8 million.
The rally in crude oil price in recent weeks has been triggered by growing economic demand around the world and crude oil production cut by major oil producers since the deadly virus COVID-19 wrecked financial systems. Nigerians will see this as positive news, based on the fact that crude oil makes about 90% of Nigeria’s foreign exchange earnings and more than two-thirds of government revenue.
“The economic recovery is already happening and that could do wonders for crude consumption,” said Moya, adding that crude was also climbing on signs that all countries in the OPEC+ group meeting Saturday were agreeable to extending supply quotas, with even “the cheaters promising they will make up their part in the coming months.”
Meanwhile, the Russians and Saudis have agreed to support an extension into July of the 9.7 million barrels per day cuts agreed under OPEC+.
The major oil producing countries were also thinking of imposing conditions on countries like Nigeria, and Iraq, which haven’t complied with the oil output cuts.
In addition, the Energy Information Administration stated that America’s crude inventories rose to 2.8 million barrels last week, versus forecasts for a rise of just about 1 million barrels.