Oil sells above $50pb as militants attacks persist in Nigeria

For the first time in seven months, crude oil yesterday sold above $50 a barrel thanks to series of militant attacks in Nigeria, wildfires in Canada and economic recession in Libya.

Brent oil futures climbed above 50 dollars a barrel on Thursday, an indication that the excess global supply that plagued the market for nearly two years is showing signs of easing.

Oil prices had rallied in recent weeks after a string of outages due mainly to wildfires in Canada and unrest in Nigeria and Libya.

The outages had knocked out nearly four million barrels per day of production.

Above 50 dollars a barrel, oil was seen by many market players as breaching a psychological barrier that could lead producers, particularly among U.S. shale companies to revive operations scrapped in recent years.

Global benchmark Brent crude oil LCOc1 was up 36 cents at 50.10 dollars a barrel, the highest in nearly seven months.

The upsurge was due to a larger-than-expected draw in U.S. crude oil inventories last week indicated buyers are starting to mop up spare supply.

U.S. crude futures CLc1 were up 29 cents at 49.85 dollars a barrel, after touching 49.97 dollars, the highest since mid-October.

“Certainly (50 dollars) is a psychological barrier, there is a momentum, people will try and push it up over that,’’ said Ric Spooner, Chief market analyst at Sydney’s CMC Markets.

A meeting of the Organisation of the Petroleum Exporting Countries on June 2 in Vienna to discuss the oil market added further support.

However, analysts already said there could be no need for a freeze deal between OPEC and NON-OPEC countries, as OPEC, led by Iran and Saudi Arabia, seem to be interested in market share than improving price through cuts.

In a related development, the Niger Delta Avengers on Thursday claimed responsibility for a fresh attack on Chevron’s gas pipeline in Delta state.

In a statement, the group announced the attack on the Escravos tank farm near the main electricity feed pipeline through which power is supplied to the oil facility.

The latest attack in the early hours of Thursday, was confirmed through the group’s tweeter handle, @NDAvengers.

“We warned Chevron, but they didn’t listen. NDA just blew up the Escravos tank farm main electricity feed pipeline,” the groups tweeted.

According to the NDA, the oil facilities were vandalised following attempts by Chevron to carry out repairs of main Escravos crude oil pipeline even after warnings from them after blowing it up the first time.

Reuters quoted sources as saying that the company’s onshore operations in the Niger Delta had been shut down following the attack, which involved the main electricity line leading to its Escravos terminal.

“It is a crude line, which means all activities in Chevron are grounded,” the source told Reuters.

After the initial attack, the group had warned against moves to repair the facility until their demands were fully met.

Spokesperson of the group, Mudoch Agbinibo, had earlier warned the government of more attacks if their demands were not met.

Last week, Chevron’s Makaraba crude oil line was attacked on the offshore Okan manifold in the region.

The attack followed previous ones on the company’s facilities at Abiteye, Utunana and Makaraba platforms in Warri South-West area of Delta State resulting in the loss of over 40,000 barrels of oil per day.