Oil hits 2016 high on U.S. draw forecasts, Nigeria woes

Tue Jun 7, 2016 5:16pm EDT
 
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices jumped more than 1 percent on Tuesday, hitting 2016 highs, with U.S. crude settling above $50 a barrel the first time in almost a year, on expectations of domestic stockpile draws and worries about global supply shortfalls from attacks on Nigeria's oil industry.

U.S. crude stockpiles likely fell by 2.7 million barrels last week to mark a third straight week of declines, an updated Reuters poll showed. [EIA/S]

A report by trade group American Petroleum Institute (API), released after prices settled, showed a higher-than-expected crude draw of 3.6 million barrels.

The U.S. Energy Information Administration (EIA) will issue official inventory numbers on Wednesday.

Crude oil rallied in the past two sessions after rebels in Nigeria's Niger Delta vowed to halt output in the country, Africa's biggest producer until last year. The Nigerian government said it was initiating talks with the rebels.

"The market remains concerned about unscheduled supply interruptions with the latest coming from additional shut-ins in Nigeria," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

"With the industry projecting a decline in total U.S. crude oil stocks in this week's reports, the market bears are remaining on the sidelines."

U.S. crude's West Texas Intermediate (WTI) futures CLc1 settled up 67 cents, or 1.4 percent, at $50.36 a barrel. It was WTI's first settlement above $50 since July 2015. The session high was $50.53, a peak from October.   Continued...

 
Fuel prices are displayed at a Kazakh state-owned oil and gas company KazMunayGas gas station in Almaty, Kazakhstan, May 4, 2016.  REUTERS/Shamil Zhumatov