Oil prices continued its up and down movement in the international oil market thus putting Nigeria economy under stress. Nigeria earns its revenue and foreign exchange mainly from oil export. However, Brent crude rose $2.86, or 3.9%, to $75.36 a barrel while U.S. West Texas Intermediate was up $2.93, or 4.3%, at $71.51 after four days of declines that sent the contract to lows last seen in late 2021. The Brent benchmark was on track to finish the week with a decline of about 5.2%, while WTI was set for a 6.6% loss, despite heading for their biggest daily percentages rises in a month.
“Crude is trying to reverse the recent washout in prices triggered by higher interest rates and recession fears mostly in the banking sector,” said Dennis Kissler, senior vice president of trading at BOK Financial.Technically, crude has been through an exaggerated liquidation sell-off, Kissler said, adding that long positions by hedge fund were at some of their lowest point in years, implying “plenty of buying power on the sidelines.” Analysts also said that there was a disconnect between oil demand and supply fundamentals and prices. “The upshot is that there is a big disconnect between oil balances and oil prices,” said PVM oil market analyst Stephen Brennock, while Commerzbank analysts noted oil demand concerns were overblown and expect a price correction upward in coming weeks. Equities, which often move in tandem with oil prices, also edged up
A better-than-expected jobs report helped ease some fears of an imminent economic downturn, spurred in part by renewed banking fears. Meanwhile in China, factory activity contracted unexpectedly in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector. However, expectations of potential supply cuts at the next meeting of the OPEC+ producer group in June have provided some price support, said Kelvin Wong, a senior market analyst at OANDA in Singapore. Investors also broadly expect the Fed to pause rate hikes at its June policy meeting.