This followed the extension of talks between the United States and China in Beijing, which raised hopes that the world’s two largest economies would resolve their trade standoff.
The United States West Texas Intermediate (WTI) traded at $51.36 per barrel, up $1.58, or 3.17 per cent, the first time this year that WTI has topped $50.
Reuters reported that the international Brent crude rose by $1.63, or 2.78 per cent, at $60.35 per barrel.
Brent price hit last year’s high of $86 in October, a development that encouraged the federal government to predicate this year’s budget on oil price of $60, against the $50 per barrel oil price benchmark proposed in the Economic Recovery Growth Plan (ERGP).
The federal government also predicated the budget on the production of 2.3 million barrels per day of crude oil.
Also N305 was proposed as exchange rate to the dollar.
But before the presentation of the budget to the National Assembly, oil price dropped to $48, raising fears on the capacity of the federal government to fund the budget.
However, with the efforts by the Organisation of Petroleum Exporting Countries (OPEC) to reduce the excess inventory in the market, oil price rose by 12 per cent in December.
Both crude price benchmarks added to Tuesday’s two per cent gains and have now been on the rise for eight straight days – their longest rally since June 2017.
The trade talks in Beijing were carried over into an unscheduled third day yesterday, amid signs of progress on issues including purchases of US farm and energy commodities and increased US access to China’s markets.
“Talks with China are going very well!” United States President Donald Trump tweeted, without elaborating. State newspaper, China Daily said yesterday that Beijing was keen to put an end to its trade dispute with the United States, but that any agreement must involve compromise on both sides.
The World Bank expects global economic growth to slow to 2.9 per cent in 2019 from three per cent in 2018, it said in a semi-annual report released late on Tuesday.
More fundamentally, oil prices have been receiving support from supply cuts started at the end of 2018 by the OPEC and allies including Russia.
The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude output surged by around 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.
However, US crude stocks fell less than expected last week, while gasoline and distillate inventories rose more than expected, the Energy Information Administration (EIA) said yesterday.
Distillate stockpiles, which include diesel and heating oil, rose by 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.