Oil prices finally increased $50 a barrel on Thursday for the first time int he last seven months because the global supply surplus that weakened the market for almost two years finally showed signs of healing. Oil Prices have jumped for the last couple of weeks thanks to a few power outages, especially because of conflagrations in Canada, and instability in Nigeria, as well as Libya. Because of this, almost four million barrels per day were taken out of the process. Traders state that the $50 per barrel is a psychological barrier that could lead producers, especially among United States companies, to bring back projects that were taken away these last few years.
Global benchmark Brent crude oil LCOc1 had increased 56 cents at $50.30 per barrel at 1220 GMT, seeing a seven-month high of $50.71, following a draw in United States crude oil inventories that was much higher than anyone projected. Last week showed traders are beginning to clean up oversupply. U.S. crude futures CLc1 jumped 48 cents at $50.04 per barrel, after reaching $50.21, the highest since October. “Certainly ($50) is a psychological barrier. There is a momentum; people will try and push it up over that,” Ric Spooner, chief market analyst at Sydney’s CMC Markets, said.
A source at oil producer Chevron said on Thursday its works in Nigeria were halted by a bellicose attack, adding fuel to the fire in a situation that was limiting hundreds of thousands of barrels. The Organization of the Petroleum Exporting Countries (OPEC) will meet on June second to talk about the oil market. “A (production) freeze remains a tail risk, but a very small one. 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,” stated David Hufton, head of PVM Oil brokers. “These are all compelling reasons to expect Saudi production to rise over the summer months.”