LONDON – Global benchmark Brent crude hovered above $81 a barrel on Friday, with bullish sentiment over U.S. demand bolstered by supply disruption in Libya and Nigeria.
Both the Brent and U.S. West Texas Intermediate (WTI) contracts had risen for three straight sessions and in early Asian trade on Friday, poised to register a third straight week of gains for the first time since April.
On Thursday some oilfields in Libya were shut down 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 Tamas Varga.
With the “market in thrall of a ‘tightening’ narrative”, any more outages will push the oil price to levels that not even the most ardent bull would have predicted for the second half of the year, Varga added.
Russian oil exports have also decreased significantly – and if this trend were to continue next week – this would probably drive the price up further, particularly since Russian oil exports are set to be reduced by 500,000 bpd in August, added Commerzbank analysts.
Both Brent and WTI futures traded flat at 1013 GMT, with Brent at $81.36 a barrel and WTI at $76.89.
Further price support came from Thursday’s reports by the International Energy Agency (IEA) and Organization of the Petroleum Exporting Countries (OPEC), predicting that oil demand will pick up in the second half of the year, particularly in China, despite broader macroeconomic headwinds.
National Australia Bank said in a research note on Friday that it expected the OPEC forecast, if realized, “to deliver oil prices well above $100 a barrel”, adding that the softening value of the U.S. dollar continued to boost commodity prices.
Cooling U.S. inflation has also given markets hope that the U.S. Federal Reserve could be close to ending its fastest monetary policy tightening campaign since the 1980s.
Meanwhile, Saudi Arabia and Russia, the world’s biggest oil exporters, this month agreed to deepen oil cuts in place since November last year, providing further support to crude prices.