Oil prices over $50 a barrel for first time in 2016

by WorldTribune Staff, May 26, 2016

Ongoing unrest in Nigeria and Libya and the economic meltdown in Venezuela have knocked enough oil out of the market to enable crude to top $50 per barrel for the first time in 2016.

Oil has topped $50 per barrel for the first time in seven months.
Oil has topped $50 per barrel for the first time in seven months.

Wildfires in Canada’s oil sands also contributed to the nearly 4 million barrels per day decrease in immediate production.

Brent and U.S. crude’s West Texas Intermediate (WTI) have now recouped about half of what they lost since mid-2014 when both traded at above $100 a barrel.

Analysts, though, said the gains, which saw Brent hit $50.51 on May 26, will lead producers, particularly U.S. shale drillers, to revive scrapped operations that could again bloat supplies and trigger a selloff.

“I am maintaining my oil view at neutral with a short term bias to the upside,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “The global surplus still exists and there is still a possibility that oil prices could retrace further.”

OPEC will next meet on June 2 and the group’s oil ministers have said any official change to output is unlikely.

“The bigger risk is that following the meeting, (the) Saudis will increase production to meet rising summer domestic demand, to preserve market share in its oil wars with Iran and Iraq,” David Hufton, head of PVM Oil brokers, said.