(AXcess News) – Oil prices hit a seven-week low on Wednesday, amid fears that the Ebola outbreak in Nigeria could create unwanted export disruptions and new speculation about when the United States will intervene in global markets to prop up prices.
The main catalyst was news that Nigeria’s government and health officials do not know how many Ebola patients there are, raising the prospect of more transport disruptions from the southwest African nation – and sparking further doubts about the OPEC leader’s ability to rein in crude output.
The oil future contract for October delivery, which rose as high as $48.49 a barrel on Tuesday, fell sharply on Wednesday to trade at $48.03 a barrel, down 0.48 percent on the day, on worries that the severe Ebola outbreak could destroy the African country’s oil industry and national economy.
“Fears over Ebola virus disease continue to cloud Nigerian output,” said Olivier Jakob of Petromatrix in a note. “Estimates of destroyed production reached a new high of 380,000 barrels per day in September (up from a similar estimate on August 29).
“According to Nigerian officials, the figure is higher, but since the total number of cases is not clear, the Nigerian Health and Protection Agency [Nigerian Health and Protection Agency] cannot be sure of its 800 cases threshold.”
Covidien, a medical technology company, announced Wednesday that it is stockpiling large amounts of ciprofloxacin, which is used to treat the virus, following an Ebola outbreak that has already killed 574 people in Liberia, Sierra Leone and Guinea.
The reason that the death toll is rising so rapidly in West Africa is not clear, and the World Health Organization said on Wednesday that it expects it will take six to nine months to control the epidemic. The officials in the three West African countries have defended their efforts to contain the virus, saying that it is contained within the borders of the three countries.
Also weighing on the market Wednesday were increased expectations of impending intervention by the US Treasury to prop up the dollar, as politicians prepare to go into recess for their September congressional midterm elections.
“Investors are already bracing for more Treasury-supply announcements,” said Hans Redeker, head of global currency strategy at Morgan Stanley in a note, “ahead of the possible action in future.”
The Financial Times reported earlier in the week that the US Treasury is pushing major world central banks to let their holdings of US Treasuries dwindle in order to bolster the dollar and boost the US currency.
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