Oil prices fall after hitting this year's highs

Fires in Alberta, Canada, destroyed property (left) and are expected to disrupt supplies by an average of 400,000 barrels a day this month in the oil-sands region.
Fires in Alberta, Canada, destroyed property (left) and are expected to disrupt supplies by an average of 400,000 barrels a day this month in the oil-sands region.PHOTO: BLOOMBERG

LONDON • Oil yesterday traded near the highest closing level in more than 10 months amid declining United States crude stockpiles and disruptions in producing nations such as Canada and Nigeria.

International Brent crude oil futures set a high of US$52.86 a barrel before trading 46 US cents a barrel lower at US$52.05 a barrel at 1132 GMT (7.32pm Singapore time). US crude fell by 34 US cents a barrel to US$50.89 after also hitting a new high this year at US$51.67.

Crude has surged more than 95 per cent from a 12-year low in February amid unexpected disruptions and a steady slide in US output, which is under pressure from the Organisation of Petroleum Exporting Countries' (Opec) policy of pumping without limits.

A new wildfire in Canada forced Cenovus to evacuate workers and shut its Pelican Lake operations, while Canadian Natural Resources brought down output from a nearby site, the companies said on Wednesday. Fires in Canada's oil-sands region of Alberta are expected to disrupt supplies by an average of 400,000 barrels a day this month, according to the US Energy Information Administration (EIA).

Rebel attacks on oil installations cut Nigeria's production by 160,000 barrels a day, or 10 percent, to 1.45 million a day in May, contributing to a drop in monthly output from Opec, according to a Bloomberg News survey.

"It was the crude draw that caught the eye" as refiners boosted operations and used more oil from storage, PVM Oil Associates analyst Tamas Varga said in a report. Price gains "would have been moderate without some help from Nigeria", where a new militant group, the Niger Delta Avengers, is targeting facilities.

West Texas Intermediate for July delivery on Wednesday traded 12 US cents lower at US$51.11 a barrel on the New York Mercantile Exchange as of 9.23am London time (4.23pm Singapore time), having risen as much 44 US cents to US$51.67. 

Total volume traded was about 20 per cent below the 100-day average.

"While we're above US$50 a barrel, momentum still remains fairly positive and what we've just seen today is a little bit of profit taking after three consecutive days of gains," CMC Markets chief market analyst Michael Hewson said.

The EIA showed US crude stocks last week fell 3.23 million barrels to 532.5 million, the third consecutive weekly fall.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 10, 2016, with the headline 'Oil prices fall after hitting this year's highs'. Print Edition | Subscribe