Oil Reaches Seven Year High, Trades at $90 a Barrel

Oil prices traded at $90 a barrel on Thursday 27 January 2022, the black gold’s prices reached seven year high as geographical crisis in Ukraine pressurizes the commodity market. Irrespective of the U.S. Federal Reserve willingness to tighten monetary policy, oil prices proved irresponsive to the market trend.

Brent crude futures reached $90.02 a barrel, an 0.1% increase at 11:13 GMT U.S. West Texas Intermediate (WTI) crude futures were down 2 cents at $87.33.

In the diplomatic scene, the tension between Russia and the West continues to grow, with Russia, and the West deadlocked over Ukraine, which has disrupted oil supply with Russia and the U.S amongst the largest oil producers in the world.

The U.S. Federal Reserve revealed on Wednesday that the Feds plan to increase interest rate in March and plans to end its bond purchases that month in order to curb inflation.

Commerzbank on oil price change; “A more pronounced price slide is being prevented by the Ukraine crisis, as there are still concerns that Russian oil and gas deliveries could be hampered in the event of a military escalation,” Commerzbank said after the morning price dip.

On the supply side of the market, the February 2 meeting of OPEC+ will play a critical role in the severity of price fluctuation, as the group is most likely to maintain its scheduled production increase in oil output by March.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, has increased output since August by 400,000 barrels per day (bpd)

The Energy Information Administration (EIA) stated that Crude inventories rose by 2.4 million barrels last week, Gasoline stockpiles rose by 1.3 million barrels, the most since February 2021.

Meanwhile in Nigeria, the external reserve, despite rising prices of oil , dropped by 0.07% on Tuesday, 25th January 2022 to close at $40.21 billion, which represents a decline of $26.77 million from the $40.24 billion recorded as of the previous day.