Oil prices rose on Wednesday amid the return of worries about supply outages as Shell announced the closing of a key pipeline in Nigeria.
Brent futures strengthened 4 percents to $ 47.34 per barrel, WTI futures rose 3.45 percent to $ 46.20 per barrel.
Shell Petroleum Development Co., a unit of Royal Dutch Shell in Nigeria, announced force majeure associated with Bonny Light oil exports, after the closure of the pipeline Nembe Creek Trunk line (NCTL) for repairs.
In this regard, the country‘s oil production could fall to a minimum of more than twenty years.
News from Nigeria have changed the trend of oil price which declined earlier in the session, as the production in Canadian oil sands region started to recover from outages related to forest fires.
The energy information Administration (EIA) of the United States reported an unexpected fall in crude inventories last week, surprising analysts, which projected growth.
According to the EIA, crude oil reserves declined in the week ending on May 6, by 3.41 million barrels to 539.9 million barrels, while analysts were expecting a growth by 0.71 million barrels.
According to the American Petroleum Institute (API) published in Tuesday, stocks in the United States increased by 3.45 million barrels to 543.1 million for the week ending May 6, whereas analysts had assumed that they grow up to 714,000 barrels.
Gold price bounced from a two-week lows on Wednesday, as the dollar rally was interrupted, while European shares fell, stoking investors ‘ appetite for the precious metal.
The dollar fell to 0.3 percent against a basket of major currencies.
Analysts consider the level of $ 1,300 per ounce as a price ceiling in the short term because the metal has already increased by 20 percent since the beginning of the year due to the strengthening of the commodity market and cooling expectations of FED rate hike in the United States in June.
Gold is supported mainly by traders‘ expectations that the next increase in interest rates will only happen later this year, because the FED is mindful of the difficult global economic environment.
The current situation is favorable for gold, but its hard to call it too favorable as the economy of the United States proved to be generally in good shape.
Goldman Sachs also sees limited growth potential of gold prices, given that the FED is unlikely to surprise by decline in rates, the dollar is almost nowhere more to fall and its hard for China to strengthen its currency so as to substantially weaken the dollar.
However, Goldman increased its price forecasts for gold on 3, 6 and 12 months to $1,200, $ 1.180 and $ 1,150 per ounce, respectively from $ 1,100, $ 1,050 and $ 1,000 per ounce, referring to the strong position of investors – speculators.
