Oil prices have risen above 50 U.S. dollars a barrel for the first time in almost seven months as the cost of crude continues to bounce back.
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Oil prices dipped for a second day in a row on Friday as some investors took profit on a surge to seven-month highs while others anxious about higher production with the market hovering near $50 a barrel. In Nigeria, attacks by militants in Niger Delta region cut the country’s daily output by 800,000 barrels.
BBC reports that the price of Brent crude has risen nearly 80 percent, a stark juxtaposition from the 13-year lows that the commodity has experienced in the beginning of this year when it hit lows of $28 and below.
The difference between the global benchmark and Nigeria’s budget benchmark has now risen a little above $12 per barrel.
“Crude oil prices have failed to hold above the $50 level due to concerns that higher prices could unlock more supply”, he said.
Around 1 million barrels a day of output has been knocked out in Canada this month after wildfires hit production. The recent weekly crude oil inventory reports released by the American Petroleum Institute and the U.S. Energy Information Administration reported a drawdown of 5.1 million barrels and 4.2 million barrels, respectively.
Société Générale analyst Michael Wittner said he expected crude markets to continue to be driven by supply disruptions in the two countries, according to the publication.
Against this improving backdrop, analysts are starting to modestly raise their forecasts.
Brent dropped 19 cents, or 0.38%, to $49.20 by 04:51 GMT on Friday from an opening price of $ 49.39 per barrel, while WTI oil dropped 19 cents, or 0.38%, to $49.12 a barrel from its opening price of $49.31 per barrel. “The return of disrupted supply and Opec’s increasing of production lay the foundation for a wider market surplus, and for prices to fall back below $40 in the short run”, UBS analyst Giovanni Staunovo said in a note. Analysts say the greenback could rise further in anticipation of a US interest rates rise, as early as June or July.
Copyright PUNCH. All rights reserved. For the past few weeks, oil prices bounced around a ceiling at $47 to $49 per barrel, sputtering and struggling to break through that key threshold.
This post was syndicated from Punch Newspapers. “It’s lower but not a collapse, which is good”, Larry said. A rise in US production could also trigger a major fall in prices.
Oil rose above $50 a barrel intraday for the first time in more than six months as a decline in US stockpiles accelerated a rebound from a 12-year low. Demand for crude has been greater than expected from countries with large economies such as the U.S., China, India, and Russian Federation.
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