Yesterday (30 June), oil fell again, pressured by more production in Nigeria and Canada. A Goldman Sachs analyst said that rising Nigerian output would put more pressure on crude prices while outages caused by Canadian wildfires are expected to end by September. OPEC’s oil production has gone up in June to its highest level in history while Nigeria’s production is recovering from recent militant attacks, having risen to about 1.9 million barrels per day from 1.6 million. Moreover, Iran and Gulf producers have also increased their outputs in the meantime.
Brent crude was down 89 cents a barrel, at $49.72, having previously risen. The world’s benchmark went up in the previous two sessions, making up for the losses after the shock caused by the result of the Brexit vote. The US and Brent crude have risen by more than 85 percent since reaching 12-year lows early this year, which was facilitated by the expectations that an oversupply that has taken its toll on the price since 2014 would start to ease following the disruptions in Canada and Nigeria.
“Supply is gradually improving in Canada, although in Norway we still have some risk,” Olivier Jakob of Petromatrix commented. In Norway, energy companies and trade unions began wage negotiations in an attempt to avoid a strike that would initially cut the country’s oil and gas production by 6 percent. Mr Jakob said that a weak gasoline crack was also 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,” he added. Mr Georgi Slavov, global head of energy, iron ore and shipping research at Marex Spectron, also said that “short-term supply conditions look overwhelmingly bearish”. In longer term, analysts agree that global oil markets will be mostly balanced as risks in countries such as Venezuela could have a further negative impact on supply.