The benchmark Brent crude price hit $50.07 a barrel in Asian trade.
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The rise followed United States data showing that oil inventories had fallen, largely due to supply disruptions as a result of fires in Canada and renewed militant attacks on oil installations in Nigeria’s Niger Delta.
Brent crude futures were down 59 cents, or 1.2 percent, at $49 a barrel by 10:39 a.m. EDT (1439 GMT).
“At US$50 per barrel, there is a behavioural shift in company policies in terms of capital expenditure and human resources hiring, market conditions and drilling potential”, he added. Crude oil imports fell 4.7 percent to 7.3 million barrels per day last week, the EIA said.
Traders are eyeing a June 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna where key producers are expected to debate a deal to freeze output to help stabilize the market. The expectation of slowing USA crude oil production could support crude oil prices.
Cheaper petrol is also expected to drive demand from U.S. drivers.
Against this improving backdrop, analysts are starting to modestly raise their forecasts.
The price of oil topped $50 a barrel this week for the first time since July, delivering a cash infusion to oil producers and a lift to beaten-down energy stocks.
But major supply outages in Canada from the wildfires around oil sands sites in Alberta knocked more than 1 million barrels per day of oil production offline for several weeks. “The bigger risk is that following the meeting Saudi will increase production to meet rising summer domestic demand, to preserve market share in its oil wars with Iran and Iraq”, David Hufton, head of PVM Oil brokers, said.
Oil Price Information Service analyst Tom Kloza said in an email that “I wouldn’t get too excited about” breaking the $50 barrier.
However, Mr Laird cautioned the price volatility was likely to continue.
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“The pile on trade is happening as all the people who said an oil rally couldn’t happen not so long ago have swung toward explaining why it has”, wrote Scotiabank economists Derek Holt and Dov Zigler in a note to clients Thursday.
