Global oil benchmark, Brent crude, extended its rally on Sunday to hit the $50 per barrel mark, the third time this year.
Oil prices have been on an uptrend since
the Organisation of Petroleum Exporting Countries decided to cut output
for the first time in eight years.
Brent, against which half of the world’s
oil is priced, had risen to around $48 per barrel on Wednesday after
OPEC agreed to reduce production, compared to $45 earlier that day.
It stood at $50.19 per barrel as of 4.53pm Nigerian time on Sunday, up from around $49.66 per barrel on Thursday.
OPEC agreed to cut production to a range of 32.5 million barrels per day to 33 million bpd from around 33.5 million bpd.
The 14-member oil cartel said the move
was aimed accelerating the ongoing drawdown of the stock overhang and
bringing the rebalancing forward.
It took into account current market
conditions and immediate prospects and concluded that it is not
advisable to ignore the potential risk that the present stock overhang
may continue to weigh negatively well into the future, with a worsening
impact on producers, consumers and the industry.
OPEC decided to establish a high-level
committee, comprising representatives of member countries, supported by
the OPEC Secretariat, to study and recommend the implementation of the
production level of the member countries.
It said the committee would develop a
framework of high-level consultations between OPEC and non-OPEC
oil-producing countries, including identifying risks and taking
pro-active measures that would ensure a balanced oil market on a
sustainable basis, to be considered at the November OPEC Conference.
Brent had on August 18 hit a high of $50.69 per barrel amid expectations of a possible freeze in production levels.
Many OPEC members, including Nigeria,
have been hurt badly by a collapse in oil prices over the last two
years. While some Gulf oil exporters have very low output costs, other
producers such as Iran and Venezuela need oil prices above $100 to
balance their budgets.
Brent crude had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October.
But it later fell to as low as $43 on
July 27 after official United States energy data showed an unexpected
glut of oil in storage.
Oil prices had rallied from lows of
under $28 per barrel in January to trade above the $50 per barrel mark
in June, spurred by a string of international oil production outages in
the second quarter that offered temporary respite from the global glut.
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