The global oil benchmark, Brent crude, extended its gains on Tuesday, trading above the $50 per barrel mark for the first time since October previous year.
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Brent crude closed on Tuesday at $51.44 a barrel, up 1.8 per cent on the day and the highest close since last October.
At about 0720 GMT Wednesday, US benchmark West Texas Intermediate (WTI) for July delivery was up two cents at US$50.38 a barrel while Brent North Sea for August delivery was down eight cents at US$51.40. The U.S. Energy Information Administration (EIA) will issue official inventory numbers at 1430 GMT.
Traders’ optimism has been increasing as global supply is now falling short of demand, thanks to disruptions in several key oil fields in the past month.
USA crude oil futures gained 32 cents to trade at $50.01 a barrel, having touched a fresh 2016 peak of $50.37, their highest since October past year.
U.S. Treasury Secretary Jack Lew said in Beijing that concerns about China’s business climate have grown due to a more complex regulatory environment and the Chinese government should open the door wider to foreign investments. This was its highest price since November 4.
At the end of Tuesday’s session, USA crude oil soared above $50.36 a barrel for the first time since July, 2015. The southern Delta swamps in Nigeria have been hit by militant attacks on oil and gas pipelines which have brought the African nation’s oil output to a 20-year low.
The Muslim holy month of Ramadan began on Monday and is seen as supportive of prices as driving demand picks up in most Muslim-dominated countries.
Crude output has also been dented in recent weeks by wildfires in Canada and unrest in Nigeria, blunting the failure of major world oil producers to impose production caps.
Commerzbank’s commodities research team estimated that production of Nigeria’s equivalent of Brent crude, “has decreased by 170,000 barrels per day because of the attacks”.
Cieszynski said traders are encouraged by the U.S. Federal Reserve’s wait-and-see approach on interest rate hikes. Prices at that level would spur increased USA production, he said.
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The upsurge is also attributed to the continued militant attacks on oil infrastructure in Nigeria, despite ExxonMobil lifting a force majeure at Que Iboe last Friday and the Nigerian oil minister meeting with militants.
