Oil tops $50/bbl but Nigeria not at the party

Brent oil climbed above 50 $/bbl this morning for the first time in nearly seven months, boosted after US government figures showed a sharper-than-expected drawdown in crude stocks last week.

However, Africa’s largest producer Nigeria is suffering its worst production disruption ever and cannot benefit from the rising oil price regime.

“The rebalancing is under way,” Giovanni Staunovo, an analyst at UBS Group AG in Zurich, said by e-mail. “But the latest tightening has come from outages and these are unlikely to last. Ultimately, the rebalancing remains dependent on an ongoing contraction in U.S. shale-oil production, and current prices are potentially throwing a lifeline to U.S. shale producers.”

However the story is much about how following a resurgence in the Niger Delta, Nigeria’s oil output has fallen to its lowest in 22 years.

OPEC peer Iraq which has been ravaged by war is producing oil at a record level and its exports have climbed to 33. Barrels daily.

Iran has itself raced to pre-sanctions oil production level of 3.6 barrels a day while Saudi Arabia is bursting its own production target and is now at over 10m barrels daily.

As a result, Brent for July settlement climbed as much as 52 cents to $50.26 a barrel on the London-based ICE Futures Europe exchange and was at $49.99 as of 10 a.m. London time. The contract increased $1.13 to $49.74 on Wednesday. The global benchmark crude was at a premium of 14 cents to West Texas Intermediate, the U.S. marker grade.

WTI for July delivery climbed as much as 41 cents to $49.97 a barrel on the New York Mercantile Exchange. The contract gained 94 cents to $49.56 on Wednesday. Total volume traded Thursday was about 27 percent below the 100-day average. Prices are up about 90 percent from a February low.

U.S. crude production dropped for an 11th week to 8.77 million barrels a day, the Energy Information Administration reported Wednesday. Inventories slid by 4.23 million barrels last week, exceeding an expected drop of 2 million. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell by 649,000 barrels.