By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices dropped more than 3 percent on Thursday, pressured by returning Nigerian and Canadian crude output from outages and as traders booked profits at the end of the best quarter in seven years.
The market soared more than 25 percent in the second quarter, as part of an 85 percent rebound since hitting 12-year lows early this year, as unplanned production cuts from Canada to Nigeria eased the glut that prompted the worst price rout in a generation.
However, production in Nigeria has risen to about 1.9 million barrels per day (bpd) from 1.6 million, due to repairs and a lack of new major attacks on pipelines in the Delta region, the state oil company said on Monday.
Resurgent Nigerian supply will put pressure on prices, Goldman Sachs said, adding that outages caused by Canadian wildfires would virtually end by September.
OPEC’s oil output rose in June to its highest in recent history, a Reuters survey showed, as Nigeria’s output partially recovers from militant attacks and Iran and Gulf members boost supplies.
The market was also amid a round of selling ahead of a long holiday weekend in the U.S. and trading liquidity was likely to drop by Thursday afternoon, said Dominick Chirichella, senior partner at the Energy Management Institute.
U.S. West Texas Intermediate (WTI) crude
In the last few minutes of trading, both contracts plunged by more than $1 a barrel as money managers and funds closed positions before posting official profit on the books, traders said.
For the month, both WTI and Brent were largely unchanged in June.
“I think we’re going be range-bound for the next six months,” said Alan Harry, director of trading at McNamara Options LLC in New York.
“I think if we didn’t have a strong driving season, we would be coming off more because we still have to deal with the fact that there’s a big oversupply of crude oil,” he added, referring to the U.S. summer driving season.
Longer term though, economists and analysts say the global oil markets will be broadly balanced as risks in countries such as Venezuela could disrupt supply further.
In Norway, oil companies and trade unions began two-day wage talks in a bid to avert a strike that would initially cut the country’s oil and gas output by 6 percent.
(Additional reporting by Alex Lawler, Dmitry Zhdannikov, Henning Gloystein and Ron Bousso; Editing by William Hardy and Marguerita Choy)