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Oil prices drop on supply disruptions in Nigeria, Libya

by Business News Report

Crude oil prices remained on course for a weekly gain of more than 2%, after supply disruptions in Libya and Nigeria heightened concerns that the markets will tighten in coming months. Several oilfields in Libya were shut down on Thursday because of a local tribe’s protest against the kidnapping of a former minister. Separately, Shell suspended loadings of Nigeria’s Forcados crude oil owing to a potential leak at a terminal. The Libya disruption is halting an estimated 370,000 barrels per day (bpd) while the loss from the Nigerian outage is pegged at 225,000 bpd, said PVM analyst John Evans.

Russian oil exports have also decreased significantly and, if this trend continues next week, it would probably drive prices up further since Russian oil exports are set to be reduced by 500,000 bpd in August, added Commerzbank analysts. Oil prices fell more than a dollar a barrel on Friday as the dollar strengthened and oil traders booked profits from a strong rally, with crude benchmarks on course for a third weekly gain. Brent crude futures fell $1.31, or 1.7%, to $80.05 a barrel. U.S. West Texas Intermediate crude futures fell $1.34, or 1.7%, to $75.55 a barrel. “It just appears to be some profit taking, with some demand concerns coming back to the front and centre as the dollar rebounds,” said John Kilduff, partner at Again Capital. The U.S. dollar index edged marginally higher after hitting a 15-month low during the session, as investors consolidated ahead of the weekend. A stronger greenback reduces oil demand, making crude more expensive for investors holding other currencies.

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