The price of oil is surging on Monday morning thanks to a production disruption in Nigeria, and continued worries about the amount of crude Venezuela will be able to produce as the country’s economy continues to plunge deeper into crisis.
Just after 8:10 a.m. BST (3:00 a.m. ET) both major benchmarks — Brent crude and West Texas Intermediate — are up by around 1.4%, with Brent at $ 48.49 and WTI trading at $ 46.89, extending to highs not seen since October 2015.
Here’s how both benchmarks look early in the European morning:
Oil prices have been helped by a reported militant attack on an offshore facility run by Chevron in Nigeria’s Niger Delta. That news caused concerns about output from Africa’s biggest producer, boosting sentiment. Along with that attack, continuing fears that Venezuela’s crisis-hit economy could affect its ability to produce oil have also boosted prices.
Accendo Markets’ Mike van Dulken notes that the market is also continuing to react to another fall in the number of oil rigs in use in the USA last week (emphasis his):
The Baker Hughes rig count was also price positive for oil with another drop in the number of operational US drilling rigs – an 8th straight weekly decline – serving to reinforce existing supply issues. Brent has since made a strong breakout above $ 48 while WTI is struggling to better $ 47. Note a reduced spread between the two oil markers.
While oil has started the week on the front foot, concerns about oversupply in the market still predominate in some thinking, especially given OPEC’s monthly oil report showing on Friday that the organisation pumped 32.44 million barrels per day in April, up 188,000 from March to the highest monthly level since 2008.