Oil struggles to maintain $50 mark as fears of output dip fade

Oil prices fell today, with Brent struggling to hold $50 per barrel as fears over outages due to a strike in Norway faded and as Nigeria's production improved, even as the economic outlook deteriorated.

Brent crude futures were trading at $50.16 per barrel at 0620 GMT, down 45 cents, or 0.9 per cent, from their last settlement. US crude was down 43 cents, or 0.84 per cent, at $49.45 a barrel.

But with markets overall tightening this year, Brent has risen by over a third since the beginning of January, and by around 25 per cent in the second quarter. US crude prices are also up by more than a third this year.

Traders said the lower prices on Thursday were a result of a higher supply outlook as well as concern over a slowing economy, compounded by Britain's vote to leave the European Union.

"With a ceasefire in Nigeria and Canadian wildfires (receding), oil prices may come under pressure," ANZ Bank said, according to Reuters.  "The vote to exit adds further to uncertainty in the global economy."

 In Asia's second largest economy, Japan, industrial output slid in May at the fastest rate in three months to its lowest level since June 2013, in the latest sign that Asian growth is stalling.

On the supply side, fears of sharp production cuts from a looming strike by Norway's oil sector eased as output from the North Sea's biggest producer would only fall by about 7 per cent in case of a walk-out, according to Norway's Petroleum Directorate.

In Nigeria, output has recovered by 200,000-300,000 barrels per day (bpd) since mid-June after attacks on oil infrastructure knocked out some 600,000 barrels of daily oil production to around 1.25 million bpd.

"The government (is) optimistically aiming for a return to normal production by end-July," Goldman Sachs said.

Prior to the disruptions, Nigerian production stood around 2 million bpd.

Goldman Sachs also said that production outages from Canadian wildfires since May, which peaked around 1.5 million bpd, would recover and virtually end by September.

In other regions, however, supplies tightened.

US crude stockpiles fell 4.1 million barrels in the week to 24 June, the sixth consecutive week of drawdowns, to 526.6 million barrels, according to the US Energy Information Administration.

US crude production was at 8.62 million bpd, down from a peak of over 9.6 million bpd last year.

In the Middle East, Iraq is set to see output fall for a second straight month, with seaborne exports in the first 29 days of June averaging 3.14 million bpd, 60,000 bpd lower than in May.