"We need to brace ourselves for further volatility,"said Ben Le Brun, market analyst at OptionsXpress on crude oil price rising for the first time in seven days. Photograph: (Getty)
Sharp production cuts from possible strike by Norway's oil workers seem to ease as output would fall only by 7 per cent in case of walk-out
Oil prices fell in early trade on Thursday, with Brent futures struggling to defend $50 per barrel as fears over strike outages in Norway faded and as Nigeria's production improved.
Brent Blend is a type of sweet crude oil that is used as a benchmark for the prices of other crude oils. It is most often found in parts of the North Sea off the coast of the UK and Norway. Brent blend makes up more than half of the world's globally traded supply of crude oil, which is why it makes an obvious choice for the benchmark of crude oil.
International Brent crude oil futures were trading at $50.10 per barrel at 0126 GMT, down 51 cents, or 1 per cent, from their last settlement. US West Texas Intermediate (WTI) crude futures were down 38 cents, or 0.76 per cent, at $49.50 a barrel.
Traders said the lower prices were a result of an improving supply outlook.
Initial fears of sharp production cuts from a looming strike by Norway's oil and gas workers seemed to ease as output from the North Sea's biggest producer would only fall by about 7 per cent even in case of a walk-out, according to data from Norway's Petroleum Directorate.
In Nigeria, violent attacks on the oil infrastructure knocked out some 600,000 barrels of daily oil production to around 1.25 million barrels per day (bpd) between January and mid-June. But a tentative ceasefire means output has recovered by 200,000-300,000 bpd since then.
"If sustainable, this ceasefire would pave the way for higher output, with the government optimistically aiming for a return to normal production by end-July," Goldman Sachs said, although it added that there was a risk of attacks resuming.
Prior to the disruptions, Nigerian production stood around 2 million bpd.
Goldman Sachs also said that production outages from Canadian wildfires since May, which peaked around 1.5 million bpd, would recover over the coming months and virtually end by September.
In other regions, however, there were signs of a tightening market.
The US Energy Information Administration reported on Wednesday that crude stockpiles fell 4.1 million barrels in the week to June 24, the sixth consecutive week of drawdowns, to 526.6 million barrels.
US crude oil production was at 8.62 million bpd, down from a peak of over 9.6 million bpd in June 2015.
In the Middle East, OPEC's second biggest producer Iraq is set to see output fall for a second straight month in June.
Iraq's seaborne exports in the first 29 days of June have averaged 3.14 million bpd, according to loading data tracked by Reuters and an industry source. That would be down 60,000 bpd from May.