Oil falls towards $50 on
higher supply outlook, economic worries
Send a link to a friend
[June 30, 2016]
By Alex Lawler
LONDON (Reuters) - Oil fell towards $50 a barrel on Thursday, pressured
by higher Nigerian output and concern about the economic outlook
following Britain's vote to leave the European Union last week.
Returning Nigerian supply will put pressure on prices, Goldman Sachs
said, adding that outages caused by Canadian wildfires would virtually
end by September.
Norwegian supply could be hit by a threatened workers' strike, however.
Brent crude <LCOc1> was down 48 cents a barrel at $50.13 as of 0856 GMT,
having risen in the two previous sessions. U.S. crude <CLc1> was down 48
cents to $49.40.
"Supply is gradually improving in Canada, although in Norway we still
have some risk," said Olivier Jakob of Petromatrix, who added a weak
gasoline crack was weighing on crude.
"I don't think the case is there for $30 oil, but to go to $60 you need
to see stronger support from the products."
Brent has risen by 85 percent since reaching a 12-year low in January,
supported by expectations that a glut that has been weighing on prices
since 2014 would start to ease and by unplanned losses from Canada to
Nonetheless, the return of some of that oil and concern over a slowing
economy, compounded by Britain's vote to leave the European Union, are
weighing near-term, analysts said.
Adding to economic concerns, industrial output in Asia's second-largest
economy, Japan, slid in May at the fastest rate in three months to its
lowest level since June 2013.
[to top of second column]
supply front, oil production in Nigeria has risen to about 1.9 million barrels
per day (bpd) from 1.6 million, due to repairs and a lack of new major attacks
on pipelines in the Delta region, the state oil company said on Monday.
"Short-term supply conditions look overwhelmingly bearish," said Georgi Slavov,
global head of energy, iron ore and shipping research at Marex Spectron, in a
report on Wednesday.
In Norway, oil companies and trade unions began two-day wage talks in a bid to
avert a strike that would initially cut the country's oil and gas output by 12
percent, the Norwegian Oil and Gas Association said.
Oil gained some support from tightening supplies in the United States.
U.S. crude stockpiles fell for a sixth consecutive week, the U.S. Energy
Information Administration reported on Wednesday. [EIA/S]
(Additional reporting by Henning Gloystein; editing by Jason Neely)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.