Oil Climbs $48.15 as Nigerian Pipeline Leak Tames Supply Worries
Oil prices on Friday, June 9, surged after a pipeline stoppage in Nigeria, however crude still ended the week down nearly 4 percent on persistent worries about global supply glut.
Brent crude oil LCOc1 settled up 29 cents at $48.15 a barrel. U.S. crude CLc1 futures rose 19 cents to $45.83 a barrel. Both benchmarks posted weekly declines of nearly 4 percent, pressured by big U.S. inventories and heavy worldwide flows. The Shell Development Company of Nigeria declared force majeure on Nigerian Bonny light crude oil after someone drilled a hole into the Trans Niger Pipeline, causing a leak. Nigeria has typically been Africa’s largest oil exporter but rebel activity and government mismanagement have caused slowdowns and stoppages.
The leak shows “the production trend in Nigeria is far from stable,” said Carsten Fritsch, senior commodity analyst at Commerzbank. Oil markets have been under pressure in part because Nigeria and Libya, the two members of the Organization of the Petroleum Exporting Countries exempt from output cuts, were boosting production. Last month OPEC and other key producers agreed to extend a November agreement to decrease production by almost 1.8 million barrels per day (bpd), and hold output there until the first quarter of 2018.
Libya’s 270,000-bpd Sharara oilfield has reopened after a workers’ protest and should return to normal production within three days, the National Oil Corp said on Friday. U.S. production is also increasing. Drillers added eight oil rigs in the week to June 9, bringing the total count to 741, the most since April 2015, energy services firm Baker Hughes said on Friday. Asian markets are also oversupplied, with traders putting excess crude into floating storage, an indicator of a glut. Thomson Reuters shipping figures show at least 25 supertankers sitting in the Strait of Malacca and the Singapore Strait, holding unsold fuel.