Oil prices edged higher on July 14 and were on track for solid weekly gains following positive demand signals, production issues in Nigeria and a reported decline in stocks.
Brent crude futures, the international benchmark for oil, were up 43 cents at $48.85 per barrel (bbl) at 6:11 a.m. CST (11:11 GMT). U.S. West Texas Intermediate crude futures were at $46.45/bbl, up 37 cents.
Royal Dutch Shell Plc (NYSE: RDS.A) declared force majeure on exports of Nigeria's Bonny Light crude oil due to the closure of one of its two export pipelines, boosting both benchmarks.
The contracts had already been trading some 5% above the week's lows, boosted by a report from the International Energy Agency (IEA) that demand growth is accelerating, from China that crude imports grew significantly and from the U.S. Energy Information Administration (EIA) that oil stocks had fallen.
"Those who wanted confirmation about global oil demand had it" in Chinese import figures, said Tamas Varga, an analyst with PVM Oil Associates. He added surging stock markets had added a "feel-good factor" to oil.
China's crude oil imports over the first six months of 2017, hit 212 million tonnes, up 13.8% on the same period in 2016, customs data showed.
This added to an IEA report raising its demand estimate. Analysts at Commerzbank said the subsequent reduction in the developed world's oil stocks was likely to continue "so long OPEC does not significantly increase its output any further."
Asian traders are selling oil products out of tanks amid soaring demand, while the EIA reported the largest drop in U.S. crude oil inventories in the week to last week in 10 months.
Still, oil stocks remained comfortably above the five-year average, and prices are more than 16% below their 2017 highs, despite an extension to March 2018 of output cuts of 1.8 million bbl/d coordinated by OPEC.
OPEC's rebalancing effort has been stymied in part by rising output from Libya and Nigeria, which were exempt from cuts and were producing close to 700,000 bbl/d more than at the time of the initial November OPEC cut agreement, according to U.S. investment bank Jefferies. Despite force majeure, Bonny Light exports continued via a second pipeline.
U.S. oil production has also risen by more than 10% over the past year to 9.4 million bbl/d.
"It's not too long before the market starts looking at the supply situation...which is anything but encouraging," Varga said.
Recommended Reading
TGS, SLB to Conduct Engagement Phase 5 in GoM
2024-02-05 - TGS and SLB’s seventh program within the joint venture involves the acquisition of 157 Outer Continental Shelf blocks.
StimStixx, Hunting Titan Partner on Well Perforation, Acidizing
2024-02-07 - The strategic partnership between StimStixx Technologies and Hunting Titan will increase well treatments and reduce costs, the companies said.
Forum Energy Signs MOU to Develop Electric ROV Thrusters
2024-03-13 - The electric thrusters for ROV systems will undergo extensive tests by Forum Energy Technologies and SAFEEN Survey & Subsea Services.
Axis Energy Deploys Fully Electric Well Service Rig
2024-03-13 - Axis Energy Services’ EPIC RIG has the ability to run on grid power for reduced emissions and increased fuel flexibility.
TotalEnergies Rolling Out Copilot for Microsoft 365
2024-02-27 - TotalEnergies’ rollout is part of the company’s digital transformation and is intended to help employees solve problems more efficiently.