Oil Prices Rise, Supply Outages in Focus
May 10 2016 - 06:10AM
Dow Jones News
LONDON—Oil prices traded higher on Tuesday, with supply outages
from Canada to Nigeria helping alleviate the global glut of
crude.
Brent crude, the global oil benchmark, rose 1.1% to $44.11 a
barrel on London's ICE Futures exchange. On the New York Mercantile
Exchange, West Texas Intermediate futures were trading up 0.6% at
$43.72 a barrel.
Wildfires in Canada's oil-rich Alberta province have knocked off
some 1.6 million barrels a day according to consultancy Energy
Aspects. Several companies including Suncor, BP, and Phillips 66
have declared force majeure on Canadian crude.
Fire officials said cooler temperatures have slowed the spread
of the wildfires since Sunday deliveries in May, but the situation
could last for several weeks given the scale of the fire, Energy
Aspects said. This adds to continuing oil output disruptions around
the globe.
"The wildfires in Alberta, rising tensions and further
disruptions to crude exports in Libya, and a new outage in Nigeria
amid increasing violence have definitely added some bullish
pressure to prices," said Michael Wittner, oil analyst at Socié té
Gé né rale.
The production outages are helping reduce a global oversupply of
crude, which has battered prices since June 2014. Analysts,
however, say that these disruptions are temporary and most of those
barrels will come back online soon.
"The current reality is that the global oil market remains
oversupplied this quarter, and crude and product inventories are
more than ample," Mr. Wittner said.
The hope for many on the market is that strong demand for crude
will be able to mop up the surplus. On Tuesday, the chief executive
of Saudi Aramco, Saudi Arabia's giant state-owned oil company, said
that he expects global oil demand to rise by 1.2 million barrels a
day this year.
"We're seeing a global increase in demand," said Amin Nasser,
the chief executive of Saudi Arabian Oil Co., known as Saudi
Aramco, at a press briefing at the company's headquarters. "We are
looking at the current market status that, even though challenging,
is an excellent opportunity for growth."
Market participants will be looking to weekly U.S. data to
assess the state of the glut. Oil stockpiles in the U.S. continue
to hover near record highs.
Private data forecaster Genscape Inc. said on Monday that
inventories at the key U.S. delivery hub in Cushing, Okla.
increased by 1.4 million barrels. The American Petroleum Institute,
an industry group, will release its inventory estimate later on
Tuesday, followed by the official data by the U.S. Energy
Information Administration on Wednesday.
Nymex reformulated gasoline blendstock—the benchmark gasoline
contract—rose 1% to $1.46 a gallon. ICE gasoil changed hands at
$386.75 a metric ton, up $4 from the previous settlement.
--Bill Spindle, Summer Said and Jenny W. Hsu contributed to this
article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
May 10, 2016 05:55 ET (09:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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