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Oil prices rise as turmoil in Nigeria adds to global supply disruptions

Published 20/05/2016, 11:32 am
© Reuters.  Oil prices rise as turmoil in Nigeria adds to global supply disruptions
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By Henning Gloystein

SINGAPORE, May 20 (Reuters) - Oil prices rose in early trading on Friday as turmoil in Nigeria, shale bankruptcies in the United States and crisis in Venezuela all contributed to tightening supplies.

Despite this, brimming inventories across the world were preventing supply shortfalls and sharper price spikes, traders said.

International Brent crude futures LCOc1 were trading at $49.10 per barrel at 0128 GMT, up 29 cents or 0.59 percent from their last settlement.

U.S. West Texas Intermediate WTI crude futures CLc1 was up 39 cents, or 0.81 percent, at $48.55 a barrel.

ANZ bank said that unexpected supply disruptions across the world, excluding output falls in the United States, amounted to around 2.5 million barrels of daily production, virtually erasing a production overhang that had pulled down prices by over 70 percent between 2014 and early 2016.

"The supply disruptions inflicting the oil market continue to ratchet up... As these issues linger, we expect an increasing supply risk premium will price into the market," the bank said.

Nigeria's oil production showed further signs of strain on Thursday as intruders blocked access to Exxon (NYSE:XOM) Mobil's XOM.N terminal exporting Qua Iboe, the country's largest crude stream.

Libyan output has also been hit by internal conflict. activity in the oil-rich Niger Delta has taken out some 500,000 barrels per day of crude oil production from other companies in Nigeria, pushing oil output in Africa's largest-producing nation to more than 22-year lows. North America, U.S. crude oil output has fallen 8.79 million barrels per day (bpd), down from a peak of more than 9.6 million bpd last year, as a wave of bankruptcies hits producers. Canada, production has also been cut as wildfires forced closures of around 1 million barrels in daily production, although output is gradually returning. South America, output from OPEC-member Venezuela is also stalling as its state-owned oil company PDVSA struggles with a cash squeeze amid a deep political and economic crisis.

Venezuelan crude oil output fell to around 2.53 million bpd in the first quarter of 2016 compared with 2.72 million bpd in the same quarter of last year, data from the Organization of the Petroleum Exporting Countries (OPEC) showed. the disruptions oil supplies to customers are not at risk, thanks to ongoing high output in the Middle East and Russia, and because of brimming oil inventories across the world, including the United States and Asia.

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