Oil Slips As Dollar Strengthens But Traders Eye Nigerian Outages
Oil prices slipped on Friday, ending a three-day rally, as a strong dollar weighed and investors cashed in on recent gains, but losses were cushioned by outages in Nigeria that have slashed output to the lowest in over two decades.
The dollar .DXY was at a more than two-week high against a basket of currencies, weighing on greenback-denominated commodities such as oil futures and making fuel imports more expensive for countries using other currencies and potentially hitting demand. [USD/][FRX/]
OPEC pumped 32.44 million barrels per day (bpd) in April, it said in a monthly report citing secondary sources, up 188,000 bpd from March. This is the highest since at least 2008, according to a Reuters review of past OPEC reports.
The group signalled the global oil glut may increase this year as surging output from its members makes up for losses from other countries whose production has been hit by low prices.
Prices were also pressured as investors locked in profits as oil headed for its fifth week of gains in the last six weeks and ahead of a long weekend in several countries in Europe, including Germany and France.
Brent crude futures LCOc1 were down 20 cents at $47.88 a barrel by 11:57 a.m. ET (1557 GMT). U.S. West Texas Intermediate crude futures CLc1 fell 43 cents to $46.27.
“The market sentiment remains biased to the upside supported by a growing view that the global oil complex is already in a rebalancing pattern,” Dominick Chirichella, senior partner at the Energy Management Institute in New York.
The markets were boosted earlier after Exxon Mobil Corp (XOM.N) declared force majeure on exports of Nigeria’s largest crude grade as a portion of production had been curtailed following damage to a pipeline by a drilling rig.
Output from Africa’s largest oil producer has fallen to 1.65 million barrels per day (bpd) due to militant attacks, Finance Minister Kemi Adeosun said, from 2.2 million bpd.
Petromatrix oil analyst Olivier Jakob said Nigerian production was unlikely to be much above 1 million bpd, excluding condensates.
“We expected more supply disruptions out of Nigeria this week but the pace of new supply problems from that country beats our expectations,” he said.
Unplanned oil supply outages have risen this month to the highest in at least five years because of wildfires in Canada and further losses in Nigeria and Libya.
ongoing outages in Canada where wildfires forced the closure of oil sands facilities and declarations of force majeure from at least four major oil firms.
U.S. investment bank Jefferies estimated the wildfires may have temporarily shut in as much as 1.4 million bpd of production, and assuming there is no pipeline damage, it will take weeks to ramp production.