09 June 2017, Sweetcrude, Abuja — Shell Petroleum Development Company, Friday, declared force majeure on Nigerian Bonny Light crude oil grade.
According to reports, this was due to sabotage of the Trans Niger Pipeline (TNP) which led to a leak after a hole was drilled on the pipeline.
In a report by Reuters, the declaration of force majeure in Nigeria prompted some increased buying of crude oil in a market still worried about the global crude oil glut.
However, the report stated that as a result of the force majeure, oil prices rose by about one percent on Friday, bouncing a bit from steep falls earlier in the week.
The report stated that Brent crude oil was up 48 cents at $48.34 a barrel, while United States’ crude was 39 cents higher at $46.04 a barrel.
It stated that U.S. crude and Brent benchmarks remained on track for weekly declines of more than three percent, pressured by big U.S. inventories and heavy worldwide flows.
Prior to that incident, the report noted that oil markets had been under pressure in part because of evidence showing Nigeria and Libya, the two OPEC producers exempt from output cuts, were boosting production.
It added that U.S. data this week showed a surprise 3.3-million-barrel build in commercial crude oil stocks to 513.2 million barrels. Inventories of refined products were also up, despite the start of the peak-demand summer season.
It said that U.S. refined product inventories are now back above 2016 levels and well above their five-year range, reflecting an unexpected slowdown in U.S. demand, Jefferies said.
Asian markets, the report added, are also oversupplied, with traders putting excess crude into floating storage, an indicator of a glut.
Thomson Reuters Eikon shipping figures show at least 25 supertankers sitting in the Strait of Malacca and the Singapore Strait, holding unsold fuel.
Those are similar amounts to May and April, indicating that even in Asia, with its strong demand growth, traders are struggling to clear inventories.