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Oil Falls As Dollar Strengthens But Traders Eye Nigerian Outages

Oil prices ended a three-day bull run on Friday, falling as a strong dollar weighed and investors cashed in on recent gains, though losses were cushioned by outages in Nigeria that have slashed output there to the lowest in 22 years, according to Reuters.

The dollar .DXY hit a two-week high against a basket of currencies, lifted by expectations the U.S. Federal Reserve will raise rates again before any other major central bank.

The strong U.S. currency weighed on greenback-denominated commodities such as oil futures, making fuel imports more expensive for countries using other currencies and potentially hitting demand.

“I would attribute these losses to profit taking after three days of strong gains before the long weekend,” said Carsten Fritsch, commodities analyst at Commerzbank. Many European countries, including Germany and France, will observe a public holiday on Monday.

Global benchmark Brent crude futures LCOc1 were down 45 cents at $47.63 a barrel at 1112 GMT.

U.S. West Texas Intermediate crude futures CLc1 traded at $46.09 a barrel, down 61 cents day on day.

Brent futures briefly turned positive in early European trading after traders said Exxon Mobil (XOM.N) had declared force majeure on Nigerian Qua Iboe crude exports following mechanical problems with a pipeline.

The production glitch came after a number of other outages that have reduced Nigeria’s crude output close to a 22-year low.

Finance Minister, Mrs  Kemi Adeosun told NTA television the country’s oil production, the highest among African nations, had dropped to 1.65 million barrels per day (bpd) from 2.2 million bpd seen before the outages.

“We expected more supply disruptions out of Nigeria this week but the pace of new supply problems from that country beats our expectations,” Petromatrix oil analyst Olivier Jakob said.

He said Nigerian production was unlikely to be much above 1 million bpd, excluding condensates.

Production losses in Nigeria added to ongoing outages in Canada where wildfires forced the closure of oil sands facilities and declarations of force majeure from at least four major oil firms.

“Wildfires may have temporarily shut in as much as 1.4 million bpd of production, but there appears to be no facility damage. Operations are beginning to restart, but we believe (assuming no pipeline damages) it will take weeks to ramp production,” U.S. investment bank Jefferies said.

The world’s major oil producers part of OPEC are set to meet in Vienna on June 2.

Russia, not an OPEC member but the biggest oil producing country, is unlikely to take part in the meeting, its energy minister said on Friday.

He added, however, the country was ready to meet separately with the cartel if such an offer was made.

Photo: Reuters


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