The price tag on Brent crude passed $50 for the first time in 2016, after a drop in US crude inventories. The milestone fuels hope of a recovery after prices have languished at the bottom of the barrel for two years.
The increase came shortly after data from the US Department of Energy showed that US commercial crude oil inventories fell by 4.2 million barrels in the week to May 20, as wildfires in the heart of the Canadian oil sands region depressed supply. Canada is the biggest supplier of crude to the US market.
Other developments over the past few weeks are thought to have exerted downward pressure on price of oil. On Wednesday, for instance, a militant group claimed to have attacked a Chevron oil facility in the Delta region of Nigeria, Africa's biggest oil exporter, fueling an energy infrastructure crisis there.
If confirmed, it would be the latest in a string of attacks in the region that have curbed Nigerian oil production to a two-decade low.
But some analysts are wary of saying outright that the drop in supply and the rising prices are more than a passing trend, highlighting factors like Iran’s plans to maintain oil production after the lifting of Western sanctions in January.
"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," analyst Bernard Aw of Singapore-based investment firm IG Markest said. "This suggested that speculative trades have driven up the price these months, and may not be sustainable."
Oil prices crashed from upwards of $100 two years ago to below $30 this January.
Industry observers are set to watch closely an upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, where the oil market’s key players hope for a deal to cut back on oil production. Last month, similar talks in Doha with OPEC members and other oil supplying countries like Russia, failed to hammer out a deal to limit oil production.
jd/jm (AFP, Reuters)