Oil prices edged up yesterday, supported by the news of an attack on a Nigerian pipeline and moving off a five-week low reached the previous session when United States crude stocks data compounded doubts that a glut in global oil supplies could be reduced.
Brent crude, according to Reuters, was up 25 cents, or 0.5 per cent, at $47.11 a barrel by 1200 GMT. US crude was up seven cents, or 0.15 per cent, at $45.41 per barrel.
Prices were underpinned by concerns about supply disruptions after militants in the Niger Delta attacked a pipeline operated by the Nigerian National Petroleum Corporation (NNPC) on Wednesday.
Still, futures have not recovered to levels traded in October when market participants were cautiously optimistic that a preliminary agreement by the Organisation of Petroleum Exporting Countries (OPEC) to cap or cut production would lead to a more balanced market.
After four days of falls, Brent and WTI contracts hit five-week lows after data on Wednesday showed stockpiles of oil in the US had risen by a record amount of 14 million barrels last week.
“Following a host of negative news, which culminated with another erratic US inventory report, oil has stabilised and moved higher, driven by short-covering and the sense that it may have become too pessimistic about an OPEC deal being reached,” said Ole Hansen, head of commodity strategy at Saxo Bank.
A softer dollar also buoyed prices by making dollar-denominated oil less costly for importing countries.
The OPEC meets on November 30 to agree a production cut after two years of global oversupply and low prices that have hurt states’ budgets.
But many market watchers are skeptical that a concrete deal can be reached or enforced; doubts which have persistently put a lid on any longer-term price rally.
OPEC had hoped that major non-OPEC producers, particularly Russia, would join any deal to cut production. While Russia has signaled this could be possible, crude output hit a post-Soviet record of 11.2 million barrels per day in October.
“There is a massive market-share battle going on between Russia and Middle Eastern oil producers that sees Saudi oil ending up in Poland and Russian crude in traditional OPEC markets in the Far East,” London broker PVM said, citing reasons why it believes Russia will not participate in a deal.
“Last but definitely not least… Russia is in dire economic difficulty and needs cash.”