Oil prices remain near 2016 highs on global supply disruptions

By Henning Gloystein
SINGAPORE, May 18 (Reuters) - Oil prices were trading near
2016 highs on Wednesday, as supply disruptions and output cuts
continued to tighten the market, although traders cautioned that
high global crude inventories were still weighing on markets.
International Brent crude futures LCOc1 were trading at
$49.31 per barrel at 0047 GMT, 3 cents above their last
settlement, while U.S. West Texas Intermediate WTI crude
futures CLc1 were unchanged at $48.31 a barrel.
Both contracts remained near their 2016 highs of $49.75 and
$48.76 per barrel, respectively, hit during intra-day trading
the previous day.
"With oil continuing to suffer from supply disruptions...
EIA inventory data will be key to price action. Any further
decline in stockpiles could see oil's run higher continue," ANZ
bank said.
The U.S. Energy Information Administration (EIA) is
scheduled to release official storage data later on Wednesday.
"With wildfires shifting back towards oil sands operations,
the risk of supply disruptions extending into June has increased
substantially. Combined with further falls in exports from
Nigeria, the physical market is particularly tight," ANZ added.
The oil industry is also keeping an eye on Venezuela, where
economic and political turmoil is threatening oil production.
"Supply outages, when set alongside concerns over Venezuelan
supply (due to insufficient funds to pay oil companies or spend
on the maintenance of loading terminals), represents a
significant amount of oil lost in the short-term, which in turn
is reflected in firm time spreads at the front of the curve,"
BNP Paribas (PA:BNPP) said.
Despite the disruptions, BNP Paribas said that there was
still a large storage overhang that would have to be reduced
before the market could swing back into balance.
The bank even said that global crude inventories were still
edging up despite the supply disruptions, implying that there is
still more oil being produced than consumed.