Oil prices surge above US$50 for 1st time in 2016

Oil prices have surged above US$50 a barrel for the first time in 2016.
Oil prices have surged above US$50 a barrel for the first time in 2016. PHOTO: REUTERS

SINGAPORE (AFP, BLOOMBERG) - Oil prices surged above US$50 a barrel for the first time in 2016 after data overnight showed a fall in US crude inventories, adding to expectations of a tightening global market.

At around 0200 GMT (10 am Singapore time), Brent North Sea crude for July delivery was up 32 cents at US$50.06, while US benchmark West Texas Intermediate (WTI) was trading 28 cents higher at US$49.84.

US inventories slid by 4.23 million barrels last week, according to a report from the Energy Information Administration.

 

Brent oil has surged almost 80 per cent since hitting a 12- year low earlier this year on signs the global oversupply will ease as Nigerian and US production falls. 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 analysts surveyed by Bloomberg.

"The immediate driver is a good draw on US crude stockpiles, helping to nudge the price up a bit further," Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. "The market hasn't had any bad news to knock it off its perch but the price is likely to struggle if it gets into the US$50s. There is still quite a bit of inventory around."

Brent for July settlement climbed as much as 34 cents to US$50.08 a barrel on the London-based ICE Futures Europe exchange and was at US$50.06 at 9:30 am Hong Kong time. The contract increased US$1.13 to US$49.74 on Wednesday. The global benchmark crude was at a premium of 17 cents to WTI, the US marker grade.