27 September 2017, London — Brent oil eased on Wednesday following a report of a possible increase in Nigerian exports, but an unexpected drop in U.S. crude inventories helped keep the price within sight of this week’s 26-month highs.
Turkey’s repeated threat to cut oil exports from the Kurdistan region in northern Iraq pushed the price close to $60 a barrel on Monday for the first time since June 2015.
Brent November crude futures were down 14 cents at $58.30 a barrel at 0832 GMT, while U.S. crude for November delivery edged up 11 cents to $51.99.
Traders and analysts said a report from pricing agency Platts that a force majeure on exports of Bonny Light crude, scheduled to be 161,000 barrels per day (bpd) this month, could be lifted “very soon” was behind the loss in Brent.
However, Brent is set for a 22 percent gain in the third quarter of this year, its largest rise in the period between July and September since 2004, thanks in part to coordinated output cuts.
The Organization of the Petroleum Exporting Countries and 11 rival producers, including Russia, have committed to output cuts of 1.8 million bpd between January 2017 and March 2018 to help global supply align with demand.
Brent futures are commanding their highest premium over U.S. crude in more than two years, partly because of the quick production response by U.S. shale producers to an uptick in price.
“There’s pretty strong upward momentum at the moment,” said Ric Spooner, chief market analyst at CMC Markets in Sydney, referring to a better-than-expected near-term outlook for the supply balance.
U.S. crude stocks fell by 761,000 barrels last week as refineries boosted production, while gasoline inventories increased, data from the American Petroleum Institute showed on Tuesday, in contrast with market expectations.
U.S. crude inventories were forecast to rise for a fourth straight week, a Reuters poll had shown.
The U.S. Energy Information Administration will release official inventory data at 10:30 a.m. EDT.
Turkish President Tayyip Erdogan on Tuesday repeated a threat to cut off the pipeline that carries 500,000-600,000 bpd of crude from northern Iraq to the Turkish port of Ceyhan in retaliation for an independence referendum in Iraqi Kurdistan.
“All the ingredients are now there for a flare-up in regional tensions with Iran also weighing in on the matter,” PVM Oil Associates analyst Tamas Varga said.
*Amanda Cooper; Fergus Jensen; Editing: Dale Hudson – Reuters