NEW YORK CITY – Oil prices settled largely unchanged on Thursday as worries about Canadian and Nigerian supply outages offset the impact of a stronger dollar, according to a Reuters report.
The prospect of a US rate increase in June prompted investors earlier on Thursday to cash out of long positions in Brent and US crude’s West Texas Intermediate (WTI) futures. Those positions made money after oil rallied on Monday and Tuesday on worries about supply outages.
But Brent and WTI closed sharply off the session lows due to crude export problems facing Canada’s Suncor Energy and reports of trouble at Nigeria’s Qua Iboe crude oil terminal.
According to the report, Suncor extended a force majeure that will prevent any more shipping of oil this month from its Syncrude facility. The decision came amid a raging wildfire in Canada's oil sands region that has shut output capacity by more than 1 MMb/d.
In Nigeria, ExxonMobil said operations at its Qua Iboe crude oil terminal were disrupted by “criminal” activity, although the plant was still producing. The terminal, Nigeria's largest and typically exporting more than 300,000 b/d, declared a force majeure last week after damage to a pipeline.
Reuters added that earlier on Thursday, some traders said the Qua Iboe terminal had been closed and its workers evacuated, helping Brent and WTI shed losses faster.
“To be fair, there have been numerous supply disruptions over the past week,” John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters. “You have to believe they are transitory, but they keep coming.”
Brent’s front-month contract settled down 12 cents at $48.81/bbl. It had fallen $1.55, or more than 3%, to $47.38/bbl during the session.
WTI’s June contract settled down 3 cents at $48.16/bbl, expiring as the front-month. It slid to $46.73 earlier.
July WTI, which will be the front-month contract from Friday, settled 11 cents lower at $48.67. The discount, or contango, in June WTI versus July was the smallest since October, reflecting the strength in spot oil from supply outages.
Some traders are betting the dollar, which hit a near two-month high on Thursday, will continue to rise over the next month or so, limiting the rebound in oil. Brent has rallied from January lows of $27 and WTI from February levels of $26. A stronger dollar makes greenback-denominated oil more expensive for holders of the euro and other currencies.
Others think the dollar will not dent oil much.
“We feel that the adjusted Fed stance is capable of extracting about $2 a barrel from potential WTI and Brent highs," Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates was quoted as saying.