Oil Prices Leap Above $50 Per Barrel As Nigeria, Canada Outages Persist

Oil prices have retained an upward movement as oil markets opened the week trading on a positive note on Monday, June 6 buoyed by global supply outages which are helping to curb supply glut.

In recent weeks, outages in Nigeria and Canada have removed more than three million barrels of crude from the market a day.

Brent crude prices rose above $50 a barrel yesterday on renewed hope for more cohesion within the Organization of the Petroleum Exporting Countries, OPEC.

However,  signs of higher crude production in the U.S. brought prices down.

The global benchmark, Brent LCOQ6, +2.12 per cent, gained 1.15 per cent to reach $50.21 a barrel. Its U.S. counterpart, West Texas Intermediate CLN6, +2.34 per cent, was trading up 1.13 per cent at $49.17 a barrel.

Oil supply in Nigeria continued to be affected by attacks from Nigerian militants, despite Exxon Mobil Corp., +1.19 per cent lifting a force majeure—a suspension of service due to events that it couldn’t control—at Que Iboe last Friday.

Price gains are limited by U.S. production figures, which show that output is recovering. Higher oil prices are likely enticing U.S. producers back to the market, as oil becomes more cost-effective to produce, analysts said.

A survey from Baker Hughes Inc. on Friday showed that active rig counts in the U.S. rose by nine last week, the first increase in 11 weeks.

Morgan Stanley said that, while the rig count increase was “not enough to materially change the outlook for U.S. production,” the figures suggest “rigs may be returning in the best acreage, namely the Permian Basin.”

If the trend continues, it could cause prices to drop again as supply outstrips demand, analysts said.