Oil pushes higher amid Nigeria leaks, OPEC schism

Crude rose to the highest NEW YORK in more than a week as cracks in a key pipeline threatened Nigerian oil exports and a schism deepened within OPEC over whether to allow more oil to flow onto global markets.

Futures advanced 0.6 per cent in New York on Monday. New leaks have been discovered in a Nigerian pipeline that’s been shut since late last week and the operator provided no estimate for when deliveries will resume. Meanwhile, Iraq joined Iran and Venezuela in panning Saudi Arabian suggestions that it’s time to unwind output caps.

The Nigerian outage involves “a big pipe, big delivery point,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. At the same time, any signals that major producers like the Saudis are boosting output are “going to tend to weigh on the market.”

The self-discipline of the OPECled coalition that adopted historic supply restraints in early 2017 may already be slipping. Russia lifted crude output 140,000 barrels a day above its cap in the first week of June, according to a person with knowledge of the matter. Saudi Arabia raised production last month to the highest since October, according to a person familiar with the kingdom’s disclosures to the cartel.

Russia and the Saudi kingdom have signalled they may formally propose a gradual production increase when OPEC and allies gather in Vienna on June 22-23.

Yet, Iraqi Oil Minister Jabbar al-Luaibi said OPEC and allied producers haven’t reached their objectives and shouldn’t be influenced by calls to pump more oil.

West Texas Intermediate crude for July delivery climbed US36 cents to settle at US$66.10 a barrel on the New York Mercantile Exchange. Total volume traded was about 24 per cent below the 100-day average.

Brent futures for August settlement ended the session unchanged at US$76.46 on the London-based ICE Futures Europe exchange, and traded at a US$10.43 premium to WTI for the same month.

In the U.S., stockpiles stored at the pipeline complex in Cushing, Okla., fell by an estimated 900,000 barrels last week, according to a forecast compiled by Bloomberg.