After loadings of the medium sweet grade were suspended because of a potential leak at the export terminal, exports of Forcados grade of crude oil has resumed, according to a Shell spokesperson on Monday.
Meanwhile, oil prices dipped same day as concerns about China’s faltering economic recovery and a stronger dollar took the momentum out of seven weeks of gains on tight supply.
Unitd States’ West Texas Intermediate crude again slid more than more than $1 a barrel to the day’s low before returning to $82.42 a barrel, down 76 cents. Brent crude futures were down 67 cents at $86.12 a barrel.
Sources had said Forcados exports of the grade, which was scheduled to ship 220,000 barrels per day (bpd) last month, were halted on the evening of July 12 after workers saw fumes near a single buoy mooring where oil was being loaded onto a vessel.
A single buoy mooring is essentially a floating loading facility that allows large tankers to moor offshore to discharge cargoes. Shell confirmed that injections into the terminal had been curtailed after the report, though no force majeure was declared.
The Shell spokesperson said the cause of the suspension would be determined by an investigation between company and community representatives in tandem with government agencies.
Meanwhile, market participants are torn, weighing a tight supply-demand balance against signs of weakening demand from China, said Phil Flynn, analyst at Price Futures Group.
“Part of it seems to be the Monday morning blahs. I think we still have to face a market that’s very tight”, Flynn said.
Vandana Hari, founder of oil market analysis provider, Vanda Insights, said a correction may be on the cards for crude markets.
“Crude has been in overbought territory for some time now, defying expectations of a correction”, Hari said.
She added that the focus had been on U.S. economic optimism, to the exclusion of economic headwinds in the euro zone and China. Weighing on oil prices, the U.S. dollar index extended gains after a slightly bigger increase in U.S. producer prices in July. That lifted Treasury yields despite expectations the Federal Reserve is at the end of hiking interest rates.