Brent for July settlement slid as much as 47 cents, or 1 percent, to $49.12 a barrel on the London-based ICE Futures Europe exchange.
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Despite the expected rise in Canadian output, ANZ bank said that WTI price support “still lingers” after the large fall in US oil inventories late last week by 4.2 million barrels to 537 million barrels due to strong demand. However, this price boost should come as a relief to some countries where oil accounts for a high proportion of their GDP. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
They have since risen to 110p on average said the AA, which does not expect prices to fall back to 100p again.
“Shale is the new shock absorber to the market”, said Tony Nunan, oil risk manager at Tokyo’s Mitsubishi Corporation, said.
“Most of these outages are unlikely to last”, UBS analyst Giovanni Staunovo said, anticipating the resumption of supply and higher production by the Organization of the Petroleum Exporting Countries to pressure prices.
Analysts also point out that for major energy companies that have been hit hard by the price rout, a recovery at this level is likely not enough to spur new investment, and there are signs that many big Global oil companies (IOCs) will continue cutting back into 2017.
But after returning to world oil markets in January after the lifting of nuclear-linked Western sanctions, Iran has said it has no plans to join any output freeze by other major crude producers.
U.S. contract West Texas Intermediate (WTI) hit $50.21 a barrel – a peak since the start of October.
Brent crude oil was trading at $48.87 per barrel, a decline of 1.4%.
Shailaja Nair at global energy information provider Platts told AFP that it remained to be seen whether oil producers would find respite after prices breached the $50 mark.
Prices also came under pressure from a strong United States dollar, buoyed by generally positive USA economic data amid growing expectations of a near-term increase in interest rates.
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“We’ve moved more quickly from $26 bbl to $50 bbl than most pundits might have thought, but that has occurred largely because of production losses in the Canadian oil sands, Libya, Nigeria, Kurdistan, and even Colombia, with attrition in USA shale”, he said.
