Oil tops $50 as decline in U.S. supplies extends recovery
HOUSTON - According to a Bloomberg report, Oil rose above $50 a barrel for the first time in more than six months as falling U.S. crude supplies accelerated a rebound off a 12-year low.
Futures climbed as much as 1.3 percent in New York to $50.21, the highest price since Oct. 9. Brent crude topped $50 for the first time since November earlier on Thursday. U.S. stockpiles shrank more than expected last week, government data showed, while supplies have also been curtailed in Nigeria, Venezuela and Canada.
"We’re seeing a steady decline in U.S. production, which is going to continue, and outages around the world," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $4.3 billion. "This doesn’t mean we’re going to continue going higher; a lot may be priced in. It was a lot easier being bullish oil with sub-$40 prices than it is near $50."
Brent sank to the lowest since 2003 in the first quarter and has since surged about 80 percent on signs the global oversupply will ease. U.S. production has dropped to the lowest since September 2014 while attacks in Nigeria have cut output to a 20-year low. Venezuelan production has been hit by power cuts and Canadian volumes have been curbed by wildfires.
West Texas Intermediate for July delivery rose 53 cents, or 1.1 percent, to $50.09 a barrel at 9:27 a.m. on the New York Mercantile Exchange. Total volume traded was 29 percent below the 100-day average. Prices are up about 90 percent from a February low.
Brent for July settlement increased 51 cents, or 1 percent, to $50.25 on the London-based ICE Futures Europe after. The contract earlier climbed as much as 1.6 percent to $50.51. The global benchmark crude was at a 16-cent premium to WTI.
U.S. crude production dropped for an 11th week to 8.77 million barrels a day, the Energy Information Administration reported Wednesday.
Crude inventories slid by 4.23 million barrels last week, exceeding an expected drop of 2 million. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell by 649,000 barrels.
"In the short term, the rally is looking technically strong and may have a couple more bucks in it," said Clayton Rogers, an energy derivative broker at SCS Commodities Corp. in New Jersey. "On a longer horizon, however, I think there are some fundamental headwinds which could cause a pullback into the mid $40s."
The Organization of Petroleum Exporting Countries is unlikely to set an output target when it meets June 2 as it sticks with Saudi Arabia’s strategy of squeezing out rivals, according to all but one of 27 analysts surveyed by Bloomberg. The final preparatory gathering of OPEC officials before the meeting didn’t include discussions on limiting output, two people said.