Drawdown in Inventory and Rebalancing to Boost Prices in Second Half.
by Prinesha Naidoo
Unexpected disruptions in production have seen crude oil prices hit six-month highs. While this is expected to set a new floor for oil prices, substantial price increases are only expected as supply tightens in the second half of the year.
A combination of vandalism and sabotage by separatist group Niger Delta Avengers has pushed Nigeria’s oil output down to a 20-year low of 1.4 million barrels per day (bpd) while more than one million bpd of Canadian crude production has been shut down due to raging wildfires in Alberta. Political and financial instability in Venezuela – which has triggered fears of a default by state oil company Petróleos de Venezuela – have also lead to concerns that the country’s oil production, already down by some 188 000 bpd, may fall even further.