Futures increased again on Friday to trade near $80 a barrel in New York, bringing this week’s increase to almost 7%. Kazakhstan’s biggest oil producer has altered output at the giant Tengiz field following protests in the country, while Libyan production has also been crimped. The oil market has firmed into a bullish backwardation structure, signaling growing supply tightness.
The OPEC+ alliance this week stuck with a scheduled output boost of 400,000 barrels a day for February, but the group is unlikely to meet that threshold as some members struggle to achieve their targets. Production in Libya has declined amid militia unrest, while Russia also failed to boost volumes last month. Nigeria, beset by disruptions at loading facilities, pumped just 1.35 million barrels a day of crude last month.
“The recent oil-price rally has clearly been supported by the supply side, with production issues in Nigeria, a deep-freeze disrupting oil flows in Canada and northern U.S., and disappointing production numbers from Brazil, Russia, and OPEC,” said Helge Andre Martinsen, senior oil analyst at DNB Bank ASA in Oslo.
The operator of Kazakhstan’s Tengiz field, known as TCO, declined to provide further details on the size of the output adjustment, but it said that production operations were continuing. TCO is a joint venture led by Chevron Corp. that pumps about a third of the OPEC+ nation’s oil.
A deep freeze in Canada and the northern U.S. has also disrupted oil flows this week. That’s coincided with shrinking American crude inventories, which have declined every week since November.
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