Oil prices find floor
after falls on supply glut woes
Send a link to a friend
[November 03, 2016]
By Sabina Zawadzki
(Reuters) - Oil prices rose on Thursday, supported by news of an attack
on a Nigerian pipeline and moving up off a five-week low reached the
previous session when U.S. crude stocks data compounded doubts that a
glut in global oil supplies could be eroded.
Brent crude was trading up 48 cents, or 1 percent, at $47.34 a barrel by
1200 GMT. U.S. crude was up 40 cents, or 0.9 percent, at $45.74 per
Prices were underpinned by concerns about supply disruptions after
militants in Nigeria's southern Niger Delta oil hub attacked a pipeline
operated by the Nigerian National Petroleum Corporation on Wednesday.
Still, futures have not recovered to levels traded in October when
market participants were cautiously optimistic that a preliminary
agreement by OPEC to cap or cut production would lead to a more balanced
After four days of falls, Brent and WTI contracts hit five-week lows
after data on Wednesday showed stockpiles of oil in the United States
had risen by a record amount of 14 million barrels last week.
"Following a host of negative news, which culminated with another
erratic U.S. inventory report, oil has stabilized and moved higher,
driven by short-covering and the sense that it may have become too
pessimistic about an OPEC deal being reached," said Ole Hansen, head of
commodity strategy at Saxo Bank.
A softer dollar also buoyed prices by making dollar-denominated oil less
costly for importing countries.
The Organization of the Petroleum Exporting Countries meets on Nov. 30
to agree a production cut after two years of global oversupply and low
prices that have hurt states' budgets.
[to top of second column]
But many market watchers are skeptical that a concrete deal can be
reached or enforced; doubts which have persistently put a lid on any
longer-term price rally.
OPEC had hoped that major non-OPEC producers, particularly Russia, would
join any deal to cut production. While Russia has signaled this could be
possible, crude output hit a post-Soviet record of 11.2 million barrels
per day in October.
"There is a massive market-share battle going on between Russia and
Middle Eastern oil producers that sees Saudi oil ending up in Poland and
Russian crude in traditional OPEC markets in the Far East," London
broker PVM said, citing reasons why it believes Russia will not
participate in a deal.
"Last but definitely not least ... Russia is in dire economic difficulty
and needs cash."
(Additional reporting by Mark Tay in Singapore; Editing by Catherine
Evans and David Evans)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.