29th November 2023
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Rise in oil prices signifies recovery from global lockdown measures

Author: Jale Richard | Published: Monday, January 4, 2021

OPEC and oil-producing nations are anticipating a boost in demand as more countries ease lockdowns.

Global oil prices rose to their highest in many months as oil-producing countries are expected to maintain production at current levels.

Prices rose in line with broader financial markets with Brent crude futures reaching $ 53.17 a barrel, the highest since March 2020.

U.S. West Texas Intermediate crude touched $49.71 a barrel, the highest since February 2020.

March Brent crude futures were at $52.97 a barrel, up $1.17 while February WTI crude futures rose $1, to $49.52 a barrel.

Oil prices ended 2020 about 20% below 2019’s average.

The rise signifies recovery from the impact of global lockdown measures, which have slashed fuel demands according to Energy experts.

Broader macro momentum trends and investors positioning for a recovery in the oil sector this year could support oil prices according to analysts.

“While crude demand is expected to rise by 5.9 million barrels per day to 95.9 million bpd this year, the group sees plenty of downside demand risks in the first half of 2021,” said Mohammad Barkindo, the Secretary-General of the Organization of the Petroleum Exporting Countries—OPEC.

OPEC and allied producers -known as OPEC+, decided last month to raise output by 500,000 barrels per day in January, anticipating a boost in demand and agreed to meet every month to review production.

South Sudan is one of the oil-producing countries that signed up to the OPEC deal last year. But the country is already facing its worst economic conditions because it gets much of its hard currency from oil sales.

The current production levels in South Sudan have dropped from 250,000 barrels per day to around 175,000 barrels per day.

In 2019, the government used to receive over $5.5 million per day or more than $165 million per month from selling crude oil.

But last year, the Central bank announced that was not able to stuff its foreign currency reserves due to scarce revenue from oil sales.

This forced the South Sudanese Pound to depreciate further against the US dollar.

One dollar has been trading at about 590 South Sudanese Pounds in the black market.

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