Brent Oil Trades Near $50 as Nigeria Militants Carry Out Attacks

NIGERIA, Capital Markets in Africa: Brent crude traded near $50 a barrel as Nigerian militants carried out attacks on oil production sites, threatening to deepen the country’s biggest output losses in decades.

September futures rose as much as 0.8 percent in London after advancing 1.3 percent Friday. The Niger Delta Avengers said they attacked five crude-pumping facilities overnight Sunday, dealing a blow to a government effort to enforce a cease-fire. Shale drillers in the U.S. brought back the most oil rigs of any week this year as confidence in a stabilized market prompts talk of expansion.

“You end up with a rather bullish cocktail” when global supply losses are combined, Tamas Varga, an oil analyst at PVM Oil Associates Ltd. in London, said in a report. “Regular pipeline bombings, production shut-ins and force majeure in Nigeria” have curbed the West African country’s output, he said.

Brent has recovered more than 80 percent from a 12-year low in January amid supply disruptions and falling U.S. output. Pledges from central banks halted a rout in global markets following the U.K. decision to leave the European Union, and both the International Energy Agency and OPEC forecast that supply and demand are returning to balance.

Brent for September settlement gained as much as 40 cents to $50.75 a barrel on the London-based ICE Futures Europe exchange and traded at $50.59 as of 10:46 a.m. local time. The contract advanced 64 cents to $50.35 a barrel on Friday. The global benchmark crude traded at a 71-cent premium to West Texas Intermediate.

Supply Disruptions
WTI for August delivery climbed as much as 36 cents, or 0.7 percent, to $49.35 a barrel on the New York Mercantile Exchange. Prices added 1.4 percent to settle at $48.99 on Friday. Total volume traded Monday was about 42 percent below the 100-day average.

The targets of the Niger Delta Avengers included Chevron Corp.’s oil wells 7 and 8 and three trunk lines belonging to Nigerian Petroleum Development Corp., according to tweets from an account that said it represents the militants. Attacks this year helped to cut Nigeria’s monthly oil output to about 1.4 million barrels a day in May, the lowest in almost three decades, according to the IEA.

Rigs targeting crude in the U.S. rose by 11 to 341, Baker Hughes Inc. said on its website Friday. It’s the fourth time in the past five weeks that producers have deployed more rigs. Explorers in the Permian Basin of West Texas, the nation’s busiest oil patch, again led the increase by adding four for a total of 154 oil rigs working in the region.

Source: Bloomberg Business News