Yesterday’s U.S. oil market rose almost 3 percent as high crude stockpiles were outweighed by the global supply disruptions in Nigeria and Canada. The attacks on Nigeria’s oil infrastructure, coupled with the wildfire in Fort McMurray, Canada have disrupted supply by approximately 2.5 million barrels per day. News this morning has Shell declaring force majeure on Bonny Light exports out of Nigeria. In addition, an update out of Canada says that the situation there could have been much worse, dodging a potentially much larger situation. Repair crews are still assessing the damage, with the hope that oil sands companies resume production soon.
The strength from yesterday’s market has resumed this morning as the dollar is lower and the international events are still in the mix. This strength is being bolstered by the EIA data released this morning. Compared to yesterday’s American Petroleum Institute figures which came in with a larger than expected 3.4 million bbl. crude build, the EIA numbers reported that U.S. commercial crude stockpiles fell by 3.4 million bbl. with gas and distillates down 1.2 and 1.6 million bbl. respectively.
In addition to the global events mentioned above and the continued supply glut that has dominated the market news in recent months, a recent change in leadership within Saudi Arabia’s Ministry of Energy should be watched closely. Early indications are that the current strategy of maintaining production, and thus market share, will continue.