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Oil rises from two-month low amid equity gains, Nigeria outages

Oil rebounded from a two-month low as world equities advanced and a weaker dollar boosted the appeal of commodities, while further disruptions worsened supply problems in OPEC member Nigeria, reports Bloomberg.
Futures gained as much as 3.2 percent in New York. The dollar weakened against most of its major peers, while global stocks rose and the pound strengthened as the U.K. moved closer to getting a new leader. Royal Dutch Shell Plc said the Trans Niger pipeline in Nigeria, capable of shipping 180,000 barrels a day, halted after a leak was found. U.S. stockpiles dropped 3.25 million barrels last week, according to a survey before government data Wednesday.

Oil has retreated from more than $51 a barrel last month as a rally spurred by supply disruptions in Nigeria and Canada and falling U.S. output lost momentum. Prices remain up about 70 percent from a 12-year low in February, a recovery that has prompted American producers to return drilling rigs to service. The rate of decline in non-OPEC supply will slow next year, OPEC said in a report Tuesday.

“Dollar weakness, sterling strength and the stock-market rally are supporting oil,” Tamas Varga, an oil analyst at PVM Oil Associates Ltd. in London, said by e-mail.

West Texas Intermediate crude for August delivery added as much as $1.41 to $46.17 a barrel on the New York Mercantile Exchange and traded at $45.88 as of 1:20 p.m. London time. The grade fell 65 cents to settle at $44.76 on Monday, the lowest close since May 10. Total volume traded Tuesday was about 24 percent above the 100-day average.

Brent for September settlement gained as much as $1.62, or 3.5 percent, to $47.87 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at an 96-cent premium to WTI for September delivery.

U.S. inventories are forecast to drop for an eighth week, according to a Bloomberg survey. That would be the longest run of declines since 2015. Stockpiles slipped by 2.2 million barrels to 524.4 million barrels in the week to July 1, according to Energy Information Administration data.

Attacks on oil facilities cut Nigeria’s monthly output to about 1.4 million barrels a day in May, the lowest in 27 years, according to the International Energy Agency. A lull in the violence helped companies make repairs and boost production of crude and condensate to 1.9 million barrels a day as of July 8, said Ibe Kachikwu, minister of state for petroleum. Attacks on Chevron Corp. and Eni SpA facilities in the past week have put the recovery in doubt.

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