A day earlier, New York-traded oil prices rose 87 cents, or 1.73%, after data showed that oil supplies in the USA fell more than expected last week. Brent North Sea oil for August delivery gained US$1.07 to US$52.51 a barrel in London.
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Continued output disruptions in Nigeria, signs of a pickup in global demand, and a USA dollar that has weakened in the wake of dovish comments from Federal Reserve Chairwoman Janet Yellen on Monday, are among the main catalysts for crude’s continued climb, said Fawad Razaqzada, technical analyst at Forex.com and City Index.
The southern Delta swamps in Nigeria have been hit by militant attacks on pipelines which have brought its oil output to a 20-year low, and the government said to scale down a military campaign and talk to the militant group.
Analysts attribute the price spike to outages in Nigeria, higher demand in China and a larger-than-expected drop in USA crude stockpiles.
U.S. West Texas Intermediate (WTI) crude futures were up 49 cents or 1 percent at $49.11 a barrel.
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“While we are witnessing a momentum trade in spot crude helped by the weakness in the dollar, the forward curve remains in contango with the build in the product markets”.
“The gasoline build was a big surprise, specially since the driving season is underway”, said Tariq Zahir, managing partner at Tyche Capital Advisors in NY which specializes in long-dated spread trades in United States crude futures. Its crude imports last month jumped 38.7 percent from a year ago.
US production is expected to drop from 9.43 million barrels a day in 2015 to 8.6 million this year and 8.19 million in 2017, the agency said.
Growing global oil supply disruptions, rising oil demand, and falling US crude oil production contributed to the price increase.
The chances of output from Canada picking up in the near term a slim as fires in northern Alberta, the country’s main oil producing region, led to at least two companies shutting down production facilities.
Oil prices were stable in early trading on Friday, supported by strong demand and global supply disruptions, but a stronger dollar kept crude below the 2016 highs reached this week.
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A fall in the dollar against a basket of currencies.DXY to a five-week low on Wednesday boosted oil prices, but the index recovered on Thursday, rising by 0.33 percent at 7.35 a.m. ET.
