Oil prices sink as Nigeria production rises

Oil prices had only recently rebounded from their January lows of under $30, and in May briefly pushed past $50 a barrel for the first time this year after the market gained support from production outages in Canada and Nigeria.

“Fundamentals offer limited scope for further price gains and we expect Brent to trade broadly sideways over the coming months”, said analysts at BMI Research.

Brent crude futures were down 22 cents, or 0.5 per cent, at $47.74 a barrel by 11.10am EDT (1510 GMT) after a 4 per cent drop in the previous session.

Supply disruptions and falling U.S. output have helped cut a global surplus, sparking a rally of more than 85 percent since prices hit a 12-year low in February.

Oil prices fell sharply on Tuesday as news of increased production from Nigeria and a jump in overall Opec output stoked fears of the crude surplus persisting on the global market.

Traders said that a report of a reduction in available U.S. crude oil stockpiles had been the main overnight price driver.

The prospect of reduced refinery processing rates has intensified the downward pressure on crude oil prices in recent days.

“Oil demand growth remains robust”, UBS said in a note, adding that “an historically high level of physical inventories … is no bar to a rising price if the direction of travel in market adjustment is supportive”.

Crude dropped with equities on a gloomy outlook for the global economy and amid signs that oil stockpiles remain ample.

Oil prices are up nearly 80 percent from 12-year lows of around $27 for Brent and $26 for U.S. crude in the first quarter and they are ripe for supply shocks just as the so-called Brexit vote came as a body blow to global growth hopes. Several tankers carrying gasoline-making components have dropped anchor off NY harbor, unable to discharge as onshore tanks are full.

“The market is really concerned about the effects of the Brexit vote on oil demand”, said Joe Bozoyan, an equity portfolio manager who focuses on energy at John Hancock in Boston.

However, production in Saudi Arabia, the biggest crude exporter, rose by 70,000 barrels a day to 10.33 million last month, the survey showed.

USA share prices extended losses shortly after they opened on jitters over the Brexit’s impact on global growth.

A militant group that has been carrying out attacks on the country’s oil installations said on July 5 it blew up a well and two pipelines, having claimed responsibility on July 3 for five other attacks.