Oil falls below $50 on Nigeria, Iraq supply boost
International oil benchmark, Brent crude, retreated on Monday, falling below the $50 per barrel mark on worries about growing Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count.
China’s July diesel and gasoline exports soared 181.8 per cent and 145.2 per cent respectively from the same month last year, putting pressure on refined product margins, Reuters reports.
Iraq’s plans this week to increase exports of Kirkuk crude by 150,000 barrels per day from northern fields weighed on prices, traders were quoted as saying.
Also hitting sentiment was an announcement by a Nigerian militant group, Niger Delta Avengers, that it was ready for a ceasefire and dialogue with the government. The group had in the past carried out a wave of attacks on oil facilities in the Niger Delta.
US drillers added 10 oil rigs in the week to August 19, the eighth straight week of rig additions, as crude rebounded towards the $50 a barrel mark that makes drilling viable.
Brent crude, which hit an eight-week high of $50.69 per barrel on Thursday, fell to $49.20 per barrel on Monday as of 6pm Nigerian time.
Last week’s gains came on the back of news that the Organisation of Petroleum Exporting Countries and other key exporters might revive talks on freezing output levels when they meet in Algeria next month.
OPEC members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria on September 26-28.
Brent crude had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October.
But it later fell to as low as $43 on July 27 after official US energy data showed an unexpected glut of oil in storage.
“Certainly, the news out of Nigeria, Iraq was a catalyst to get this market a bit lower. We had a nice, robust rally into bull market territory. With that, I think the market is somewhat uncomfortable to take it much higher,” the Head of Global Commodity Strategy at TD Securities in Toronto, Bart Melek, was quoted by Bloomberg to have said.
The NDA declared an end to attacks on oil infrastructure in Niger Delta and will conduct talks with the government, according to a statement on a website that says it represents the group.
The militants said they would cease hostilities in the Niger Delta “against all interest of the multinational oil corporations,” to support talks with the government, according to the statement.