Oil prices rose on Friday, bouncing a bit from steep falls earlier in the week as a declaration of force majeure in Nigeria prompted some buying in a market still worried about the global crude glut.
Brent crude oil was up 30 cents at $48.16 a barrel by 2:40 p.m. EDT. U.S. crude gained 19 cents, or 0.4 percent, to settle at $45.83 a barrel. U.S. crude and Brent benchmarks remained on track for weekly declines of more than 3 percent, pressured by big U.S. inventories and heavy worldwide flows.
Prices held gains after Baker Hughes said eight more rigs came online in the U.S. this week, marking a record 21 straight weeks of increases, Baker Hughes said.
The Shell Development Company of Nigeria declared force majeure on Nigerian Bonny light crude oil after someone drilled a hole into the Trans Niger Pipeline, causing a leak.
Rebel activity and government mismanagement have frequently interrupted crude production in Nigeria, generally Africa’s largest oil exporter.
The leak shows “the production trend in Nigeria is far from stable,” said Carsten Fritsch, senior commodity analyst at Commerzbank.
Prior to that incident, oil markets had been under pressure in part because of evidence showing Nigeria and Libya, the two OPEC producers exempt from output cuts, were boosting production.
Last month the Organization of the Petroleum Exporting Countries and other key producers agreed to extend a November agreement to decrease production by almost 1.8 million barrels per day (bpd), and hold output there until the first quarter of 2018.
Libya’s 270,000-bpd Sharara oilfield has reopened after a workers’ protest and should return to normal production within three days, the National Oil Corp said on Friday.
“Libyan production is still very uneven, theres no sign of any stable trend,” said Fritsch. He said Libya’s target of 1.25 million bpd was “wishful thinking,” saying 850,000-900,000 bpd by year-end was more realistic.
U.S. data this week showed a surprise 3.3-million-barrel build in commercial crude oil stocks to 513.2 million barrels. Inventories of refined products were also up, despite the start of the peak-demand summer season.
U.S. refined product inventories are now back above 2016 levels and well above their five-year range, reflecting an unexpected slowdown in U.S. demand, Jefferies said.
Asian markets are also oversupplied, with traders putting excess crude into floating storage, an indicator of a glut.
Thomson Reuters Eikon shipping figures show at least 25 supertankers sitting in the Strait of Malacca and the Singapore Strait, holding unsold fuel.
Those are similar amounts to May and April, indicating that even in Asia, with its strong demand growth, traders are struggling to clear inventories.