crude oil shipment
crude oil shipment

Hope rises for Nigeria’s bartered economy yesterday, as Oil prices tested the $50-per-barrel mark on Thursday as production outages brought a faster-than-expected recovery to an oversupplied market many thought will stay depressed through the year.
While a crude glut could grow in coming months if demand stalls, wildfires in Canada’s oil sands, unrest in the Nigerian and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela have knocked out nearly four million barrels per day in immediate production.
That has enabled futures of Brent and U.S. crude’s West Texas Intermediate, WTI, to gain nearly 90 percent from the 12-year lows seen this winter, and recoup about half of what they lost since mid-2014 when both traded at above $100 a barrel.
But some market watchers say oil’s climb to above $50 for the first time in seven months could spur producers, particularly U.S. shale drillers, to revive scrapped operations that could again bloat supplies and trigger a selloff.
Certainly ($50) is a psychological barrier. There is a momentum, people will try and push it up over that,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets.
A source at oil producer Chevron said on Thursday its activities in Nigeria had been “grounded” by a militant attack, worsening a situation that had already restricted the supply of hundreds of thousands of barrels.
A meeting of the Organisation of the Petroleum Exporting Countries, OPEC, on June 2 in Vienna to discuss the oil market added further support.
OPEC officials were more positive about oil market conditions at talks in Vienna ahead of next week’s gathering of oil ministers, two sources said on Thursday, in a sign the exporter group is unlikely to change output policy on June 2.
However, the recent rise in oil prices and friction between key members Saudi Arabia and Iran mean a coordinated effort to intervene to support prices is slim.
“A (production) freeze remains a tail risk, but a very small one. The bigger risk is that following the meeting Saudi will increase production to meet rising summer domestic demand, to preserve market share in its oil wars with Iran and Iraq,” David Hufton, head of PVM Oil brokers, said.
“These are all compelling reasons to expect Saudi production to rise over the summer months.”


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