Brent crude prices hovered near seven-month highs on Tuesday, holding to gains from the previous session as market sentiment appeared strong amid Nigerian oil infrastructure attacks and projections for falling US crude inventories.
Brent crude for August delivery was up 2 cents at $50.57 a barrel by 0608 GMT, not far from Monday’s intraday high of $50.83, the strongest since November.
NYMEX crude for July delivery was steady at $49.69 a barrel, after settling up $1.07 on Monday.
“With Brent staying above $50, oil is on an upward momentum with the restart of French refineries that were shut on strikes and pipeline attacks in Nigeria,” said Kaname Gokon at brokerage Okato Shoji in Tokyo.
Preliminary work got underway on Monday to restart three of Total’s French oil refineries, stopped as part of nationwide strikes, which would lead to higher crude demand.
Crude futures have gained more than 85 per cent from this year’s lows following supply outages in Canada, Venezuela, Libya and Nigeria.
Nigeria’s Bonny Light crude output is down by an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, according to a source.
While OPEC failed to agree a clear oil-output strategy last week, traders said Saudi Arabia’s promise not to flood the market has provided support to oil.
Oil was also propped up by a weak dollar, which wallowed near four-week lows against a basket of currencies. Federal Reserve chair Janet Yellen said interest rate hikes are coming but gave little sense of when.
US commercial crude oil inventories likely fell by 3.5 million barrels last week, marking a third straight weekly drop, a preliminary Reuters poll showed ahead of the data by the American Petroleum Institute due out at 20:30 GMT.
Oil also got support after market intelligence firm Genscape reported a drawdown of 1.08 million barrels at the Cushing, Oklahoma delivery point for WTI futures last week.
Traders were also awaiting China’s trade data for May due out on Wednesday for fresh incentives. A series of Chinese indicators are expected to reinforce views that the world’s second-largest economy is steadying, but not gaining momentum.
The market braced for signs of recovering US oil production after weekly data from Baker Hughes showed that US drillers added rigs for only the second time this year, analysts said.
Reuters
