By Adewale Sanyaolu with agency reports
Oil price fell below $50 yesterday, amid concerns over the increase in Nigeria’s oil production from 1.6 million barrels per day (bpd) to 1.9 million bpd.
The increase in Nigeria’s oil production is predicated on the successful completion of repair works on vandalised crude oil pipelines by the Niger Delta militants.
Group General Manager, Nigerian National Petroleum Corporation (NNPC), Mr. Garba Deen Muhammed, said on Monday, that oil production in Nigeria had risen to about 1.9 million bpd from 1.6 million, due to repairs and a lack of new major attacks on pipelines in the Niger Delta region.
According to Goldman Sachs, returning Nigerian supply will put pressure on prices, even as outages caused by Canadian wildfires would virtually end by September.
Brent crude was down 88 cents a barrel at $49.73 as of 1242 GMT, having risen in the two previous sessions. US crude was down $1.02 to $48.86.
“Supply is gradually improving in Canada, although in Norway we still have some risk,” said Olivier Jakob of Petromatrix, who added that a weak gasoline refining margin 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 (refined) products.”
Brent has risen by 85 per cent 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 Nigeria.
“We have a large overhang of surplus stock to work off and that will take some time as well. I would imagine that over time, you will see more upward pressure than downward pressure on prices,” said Royal Dutch Shell’s Chief Executive, Ben van Beurden.
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, slide in May at the fastest rate in three months to its lowest level since June 2013.