USA inventories slid by 4.23 million barrels last week, according to a report from the Energy Information Administration.
Advertisement
USA crude traded as high as US$50.21 after the USA government reported a larger-than-expected drop in fuel stockpiles for last week.
The price of Brent crude oil nudged above $50 per barrel on Thursday for the first time in 2016.
Canada is the biggest supplier to the U.S. and wildfires in the western provinces have knocked out about a million barrels a day.
Elsewhere, crude oil for July delivery on the New York Mercantile Exchange picked up 33 cents, or 0.67%, to trade at $49.89 a barrel after prices hit a daily high of $49.97, a level not seen since October 12. Oil prices have been boosted by short-term disruptions in Canada and Nigeria, which have balanced an increase in production in Saudi Arabia and Iran, and by stronger demand in Russian Federation and China.
“The remarkable over 80 percent rally in oil since earlier this year may have been overdone, as the underlying macro conditions have not changed proportionally”, IG Markets analyst Bernard Aw said in a client note.
“What is more, oil production is gradually resuming in those regions of Canada plagued by wildfires”, he said in a research note.
Goldman Sachs said earlier this month that it now expected oil prices to consistently hit $50 a barrel in the second half of 2016 and $60 by the end of 2017.
The API said that gasoline inventory soared 2 million barrels to 240.2 million barrels versus expectations of a 1.2 million-barrel decline, while demand for gasoline in the 4-week average was up 3.88 pct to 9.7 million barrels last week. On Thursday, the militants claimed an attack on a power line feeding Chevron’s Escravos terminal.
A meeting of the Organization of the Petroleum Exporting Countries (OPEC) on June 2 in Vienna to discuss the oil market added further support.
The seven-month high for crude oil prices benefits oil and gas exploration and production companies such as WPX Energy (WPX), Swift Energy (SFY), and Energy XXI (EXXI).
Advertisement
But analysts are skeptical that the increase would be sustained.
