Singapore | Oil prices dipped in Asia today after the previous day’s rally as Canadian oil companies prepare to restart production after being closed by huge wildfires.
The commodity has seen strong swings this week as traders weigh up the effects of the blazes that have torn across the vast oil sands region of Alberta as well as disruptions elsewhere. Tuesday saw both main contracts rally as data showed output in oil major Nigeria had slumped to a 22-year low because of pipeline sabotage and increasing unrest that has seen major companies evacuate staff. Rebels seeking a fairer share of revenue for locals in the oil-rich southern delta are increasingly targeting facilities, posing a fresh security challenge for President Muhammadu Buhari.
Also, yesterday Canadian officials suggested output in could take time to return to normal after the fires. Alberta Premier Rachel Notley said facilities could come back online in the coming days and short weeks ahead, after a meeting with oil company executives. But analysts said they expected prices to flatline for the time being. The sentiment around traders in the market is that they do think the disruptions are a temporary obstacle. Longer-term, should oil companies resume production, they are expecting oil prices to hover around $40, CMC Markets senior trader Alex Wijaya told AFP.
At around 0445 GMT, US benchmark West Texas Intermediate for delivery in June was down 32 cents, or 0.72 per cent, at USD 44.34 and Brent crude fell 27 cents, or 0.59 per cent, trading at USD 45.25 a barrel. West Texas Intermediate soared 2.8 per cent and Brent climbed 4.3 per cent yesterday. Investors are now waiting for the release of US Energy Information Administration’s stockpiles report later in the day for an idea about demand in the world’s biggest oil consumer. A report Tuesday from the American Petroleum Institute (API) indicated inventories had risen last week.
Oil prices have been hammered over the past two years by weak demand, a huge supply glut, overproduction and a slowdown in the global economy, particularly China. While the black gold is up from near 13-year lows in February, it is well down from the levels above USD 110 touched in mid-2014.