Photo by: Reuters
TORONTO (miningweekly.com) – Hamstrung oil producers could on Thursday afford a brief sigh of relief as the prices of both West Texas Intermediate (WTI) oil and Brent crude oil rose briefly above the psychologically important $50/bl mark in early trading.
WTI hit a high of $50.21/bl around 08:00 Eastern Daylight Time, while Brent crude peaked at about the same time at $50.51/bl.
The rallies were mainly driven by supply disruptions caused by raging wildfires in Canada’s Alberta oil patch – the biggest supplier of crude to the US market – which had taken out about one-million barrels a day, while growing global demand was adding momentum to a potential market recovery.
According to information provided by the US Energy Information Administration, US crude oil inventories fell by 4.2-million barrels to 537.1-million barrels in the week up to May 20.
WTI had risen 92% since recording its 12-year low of $26.14/bl on February 11, while Brent crude had, as of Thursday, risen 80% since it hit a 13-year low of below $28/bl at the start of the year.
The global oil industry was optimistic that the top oil-producing countries in the world would reach an agreement next month to curb the current production glut, while short-term disruptions to oil supplies helped to offset the stubbornly higher output from top producers Saudi Arabia and Iran, which refused to rein-in production for fear of losing market share. Militant attacks in Nigeria also restricted oil output.
Meanwhile, rising crude imports in developing economies such as China, Russia and India also spurred prices upwards, setting the stage for analysts to guess at the price potential for the critical commodity during the rest of the year.