Oil price drops below $70 per barrel, as OPEC urged to boost output

By Dayo Olujuwon

Oil depreciates below $70 a barrel yesterday as the United States asked the Organisation of Petroleum Exporting Countries, OPEC, and its oil-producing partners to boost output, they noted that the current production was not enough and could be a threat to the global economic recovery.

Brent Crude traded at $69.83, a decline of 0.80 cents, while the United States West Texas Intermediate (WTI) crude dropped $0.62, or 0.92 percent, to $67.69 a barrel. Nigeria’s grade of crude oil Bonny Light traded at $69.79 per barrel.

The OPEC and non-OPEC producers, at a joint meeting last month agreed to boost output by 400,000 barrels a day starting in August until the rest of their output cuts are phased out.

The producers have been gradually easing a record cut of 10 million BPD, about 10 percent of world demand, made in 2020 as consumption recovers from the pandemic-induced slump.

In reaction to the market development, Lukman Otunuga, Senior Research Analyst at FXTM stated: “Markets remain cautious amid Delta fears. It may be a relatively quiet week for Nigerian markets due to the absence of Tier 1 economic reports. Nevertheless, the developments outside of Nigeria could impact sentiment ahead of the country’s inflation report next week.

“In the commodities arenas, oil prices remain pressured by rising Covid-19 cases, particularly in China. As travel curbs in Asia raise concerns over the outlook for fuel demand and the dollar appreciates on Fed taper expectations, this may result in lower oil prices. Given how a handsome chunk of Nigeria’s export earnings and government revenues are from crude sales, this is an external risk that continues to impact Nigeria’s economic outlook.”