Oil Set for Weekly Gain as Nigeria Halt Eases Oversupply Concern

(Bloomberg) 

Oil headed for a weekly gain after a pipeline shutdown in Nigeria eased, but did not dispel, concerns about rising OPEC output.

Futures were little changed in New York, heading for a weekly increase of 4.3 percent. Royal Dutch Shell Plc’s local unit invoked force majeure, a legal clause enabling the suspension of deliveries, on exports of the Bonny Light grade after the halt of the Nembe Creek Trunk Line. While the disruption allayed some concerns that a production recovery in Nigeria is undermining OPEC’s efforts to clear a global glut, the rise in Libyan output continued.

Oil remains in a bear market on concern rising global supply will offset cuts by the Organization of Petroleum Exporting Countries and its partners. The group’s output climbed last month to the highest this year as members exempt from the deal — Nigeria and Libya — pumped more and others slipped in delivering their pledged curbs.

“Concern about potential supply disruptions in Nigeria are adding support to prices,” said Jens Naervig Pedersen, an analyst at Danske Bank A/S in Copenhagen.

West Texas Intermediate for August delivery was at $46.16 a barrel on the New York Mercantile Exchange, up 8 cents at 2:01 p.m. in London. Total volume traded was about 28 percent above the 100-day average.

Brent for September settlement rose 2 cents to $48.44 a barrel on the London-based ICE Futures Europe exchange. Prices are up 3.7 percent this week. The global benchmark traded at a premium of $2.12 to September WTI.

Oil-market news:

The International Energy Agency said on Thursday that although demand is growing faster than previously estimated, the rebalancing of the market appears less certain as OPEC production increases. U.S. crude inventories slid the most since September last week, the Energy Information Administration said on Wednesday.  OPEC would hurt itself and help U.S. shale producers if it adopted deeper cuts, the former oil minister of Qatar warned. A pipeline that hauls oil from West Texas’ Permian Basin to Houston shut Thursday after a 1,200-barrel spill near the state capital, Austin. The world’s biggest oil producers are starting to take electric vehicles seriously as a long-term threat, according to a study by Bloomberg New Energy Finance.