USA crude prices jumped to their highest levels in more than 10 months mid-morning Wednesday, rising for the third consecutive session, boosted by ongoing supply disruptions in Nigeria as well as strong demand from China.
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Oil traded near the highest close in more than ten months before the United States government data forecast to show crude stockpiles dropped for a third week, trimming a glut.
Global benchmark Brent crude futures LCOc1 rose to the highest level since October 12, up 32 cents at $51.76 a barrel at 0835 GMT.
West Texas Intermediate crude, the USA benchmark, will average $42.83 a barrel in 2016 versus the May projection of $40.32, according to the report.
Oil prices rose on Tuesday, with Brent reaching a near eight-month high on unrest in Africa’s biggest crude producer Nigeria as well as owing to dollar weakness.
These factors coupled with last week’s militant threat of Niger Delta Avengers to take Nigeria’s oil production down to zero are keeping oil prices buoyant.
Nigeria’s oil output was between 1.5 million and 1.6 million barrels a day, down from 2.2 million barrels at the start of the year.
Another factor contributing to some volatility is the uncertainty over the Federal Reserves’ decision to hike interest rates, which has weakened the US dollar and bolstered oil prices.
“Even with higher crude oil prices passed on to consumers at the pump, summer retail gasoline prices are still expected to be the lowest in 12 years”, EIA Administrator Adam Sieminski said in an emailed statement.
Oil prices edged up in early trading on Monday as a plunge in the USA -dollar was seen spurring fuel demand, although traders said plentiful supplies capped increases.
Prior to the strong rebound, oil futures had struck near 13-year low points in February.
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Traders will keep an eye on the EIA’s official crude oil inventory data, due later on Wednesday, while confirmation of a draw. Supplies remain about 130 million barrels above the five-year seasonal average. The rally heightened after last month’s wildfires in Canada’s oil sands region and also has been supported by supply outages elsewhere, including Nigeria, Venezuela and Libya. Inventories fell by 3.57 million barrels last week, the American Petroleum Institute was said to report. Nationwide inventories slid by 3 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.
