By Adedapo Adesanya
Brent Crude hit $31 per barrel on Thursday after the International Energy Agency (IEA) gave an improved outlook for the global oil market.
According to the Paris-based agency, there would be an improved demand stronger than expected and supply in the year after a very difficult price crash in March.
As a result, Brent crude oil, the international benchmark, rose by 6.44 percent or $1.88 to trade at $31.07 per barrel on Thursday night, while the West Texas Intermediate crude oil, the US benchmark, rose by 8.5 percent or $2.18 to sell at $27.44 per barrel.
The IEA boosted its estimates for global oil demand in the second quarter of the year by 3.2 million barrels a day to 79.3 million.
However, it stated that consumption remained on track for a loss of almost 20 million barrels a day in the quarter compared with the same period in 2019 due to the pandemic.
For 2020 as a whole, the demand forecast was pushed up by 700,000 barrels a day, but said it still remains on track for an annual plunge of 8.6 million a day equivalent to 9 percent.
On the problem of oversupply, the firm said world oil production is on track for a historic decline in May to the lowest level in nine years. This is because the Organisation of the Petroleum Exporting Countries (OPEC) and its partners are slashing output, while others like the United States are forced to scale back drilling.
Global oil supplies are on course to drop by 12 million barrels a day in May compared with April as oil exporters led by Saudi Arabia and Russia implement deep production cuts that will take 10 percent off total production quotas.
Business Post reported earlier this week that the kingdom and other Middle East producers like the United Arab Emirates and Kuwait pledged to deepen those curbs even further in June.
The agency also said that cuts from countries outside OPEC+, including the US and Canada, meant output was 3 million barrels per day lower in April than it was at the start of 2020. It could be 4 million barrels per day in June, according to the report, and continue to fall even further.
However, despite its more optimistic approach, the IEA acknowledged some uncertain outlooks. It noted that it is unclear whether governments can resume economic activities without causing renewed outbreaks of the pandemic, and also worried about how far the OPEC+ alliance will implement promised supply curbs.
Modupe Gbadeyanka