Crude oil inventories declined for the same period.
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“This suggests that prices are driven by speculation in a rebound that is perhaps not sustainable”.
Citigroup analyst Edward Morse cautions that all these factors can go the other way-Canadian oil sands will come back slowly, and though Nigerian supplies are iffy, U.S. producers are likely to respond to rising prices by boosting production.
Oil has been a touchy commodity ever since the Fed interest rate hike updates and it has now gone over $50 a barrel prompting many investors to take advantage of this oil price high.
“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.
Brent, the global benchmark, its July settlement increased 64 cents, or 1.3 percent, to $49.25 a barrel on the London-based ICE Futures Europe exchange, which the contract was as high as $49.69.
West Texas Intermediate for July delivery rose as much as 83 cents to $49.45 a barrel on the New York Mercantile Exchange and was at $49.30 at 8:45 a.m. Central time. On May 24, 2016, the American Petroleum Institute reported an inventory fall of 5.1 million barrels, surpassing market expectations.
Talks in recent months between Opec and Russian Federation about freezing oil production had already helped prices recover.
USA oil production, which slipped for an 11th week, hit its lowest level since September 2014, further supporting the inventory drawdown.
Short-term disruptions to oil supplies have also lifted the price, offsetting higher production from Iran and Saudi Arabia. Analysts are expecting strong demand for gasoline this summer, starting with the Memorial Day holiday next week, and lower-than-expected consumption could weigh on prices.
BP said last month it had budgeted for prices of at least between $50 and $55 a barrel in 2017.
Supply disruptions in Canada, Nigeria and Libya are also helping to support the upward price momentum.
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They said global oil stocks could begin falling by the end of the second quarter due to the disruptions in Canada and Nigeria.
