Oil hits $50 on weaker US dollar, Nigeria supply outages

Oil prices climbed once again above $50 a barrel on Monday, supported by a plunge in the US dollar and ongoing attacks on oil infrastructure in Nigeria.

Brent crude futures last traded nearly 1 percent higher at $50.09 per barrel (bbl), while WTI crude settled above $49/bbl.

On Friday, the dollar lost over 1.5 percent against a basket of other leading currencies on the back of a weaker-than-expected jobs report out of the US.

Meanwhile, the Niger Delta Avengers, a group of saboteurs have been bombing pipeline and destroying underwater equipment in Nigeria’s petroleum-rich south. As a result of the attacks, the country’s output has recently plunged to over 20-year lows.

Analysts have been divided over how big a recovery oil prices would see this year, given the failure on OPEC’s part to reach a deal on a production cap or freeze.

Abhishek Deshpande, chief oil analyst at Paris-based Natixis SA, told Argaam that he expects Brent crude to average $48 per barrel in the fourth quarter of 2016.

“We expect oil prices around $60 by the end of 2017, if not earlier,” he said.

Meanwhile, Saudi-based NCB Capital said in a recent report that it expects prices for Arabian Light to average around $45 this year, on account of “elevated production levels, decelerating demand, and record high inventories.”

“Supply factors pertaining to OPEC and demand dynamics pertaining to emerging markets, in particular China, have underpinned this bearish view,” the report explained, noting that the lack of unified front within OPEC will be a drag on oil prices going forward.

Others have been more optimistic with their predictions as they suggest that the signs of a rebalancing oil markets are already present.

“There will be some corrections along the way, probably linked to headlines about individual supply outages easing or refinery margins weakening. But overall prices will continue to recover,” Richard Mallinson geopolitical analyst at London-based Energy Aspects told Argaam, adding that oil prices would hit $65 in Q4-2016.

Write to Jerusha Sequeira at jerusha.s@argaamnews.com and

Joumana Saad at joumana.saad@argaamplus.com