Oil prices jumped more than 1 percent reaching 2016 highs on Tuesday, with USA crude settling above $50 a barrel the first time in nearly a year, on concerns of domestic stockpile drops and worries about global supply shortfalls resulting from attacks on Nigeria’s oil industry.
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U.S. commercial crude oil inventories likely fell by 3.5 million barrels last week, marking a third straight weekly drop, a preliminary Reuters poll showed ahead of the data by the American Petroleum Institute due out at 20:30 GMT.
Global benchmark Brent crude futures rose by 96 cents at $52.40 US a barrel, after hitting a high going back to October 12.
Global benchmark Brent crude futures increased 32 cents at $51.76 a barrel, while the U.S. crude futures edged up 20 cents to $50.56 a barrel, Reuters reported.
“While we’re above $50 a barrel, momentum still remains fairly positive and what we’ve just seen today is a little bit of profit taking after three consecutive days of gains”, CMC Markets chief market analyst Michael Hewson said.
Crude has surged more than 95 percent from a 12-year low in February amid unexpected disruptions and a steady slide in US output, which is under pressure from the Organization of Petroleum Exporting Countries’ policy of pumping without limits.
Traders said oil prices rose on a sharp fall in the dollar on Friday after weak USA jobs data sparked concerns over the state of the world’s biggest economy, cutting expectations of a near-term cut in U.S. interest rates.
On Wednesday the Department of Energy said USA commercial stocks had fallen far lower than expected in the week of June 3, fanning talk that demand is improving in the world’s biggest oil consumer.
The EIA’s latest weekly status report, released at 10:30am EST, reported a 3.226-million draw on USA crude inventories, while the consensus had called for a drop between 2.7 million to 3.4 million barrels.
Crude has almost doubled in value since hitting decade-lows earlier this year as production disruptions and falling USA output have taken barrels off the oversupplied global market.
The prices were buoyed after last month’s wildfires in Canada’s oil sands region and also has been supported by supply outages elsewhere, including Nigeria, Venezuela and Libya.
Brent crude futures settled up 89 cents, or 1.8 percent, at $51.44 a barrel. Total crude production has fallen by more than 500,000 bpd in a country that was once Africa’s biggest oil producer. The contract gained 67 cents, or 1.4 per cent, to US$50.36 on Tuesday.
Concurrently, ongoing difficulties in Nigeria – where militant attacks on oil pipelines have sent the country’s production down to a 20-year low – also impacted trading sentiment.
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Crude production increased 10,000 barrels a day to 8.75 million, the first gain in 13 weeks, EIA data show.
