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 Oil prices have rallied in recent weeks after a string of outages,
due mainly to wildfires in Canada and unrest in Nigeria and Libya,
knocked out nearly 4 million barrels per day of production.
Above $50 a barrel, oil was seen by many market players as breaching
a psychological barrier that could lead producers, particularly
among U.S. shale companies, to revive operations scrapped in recent
years.
Global benchmark Brent crude oil <LCOc1> was up 36 cents at $50.10 a
barrel at 1110 GMT, the highest in nearly 7 months, after a
larger-than-expected draw in U.S. crude oil inventories last week
indicated buyers are starting to mop up spare supply.[EIA/S]
U.S. crude futures <CLc1> were up 29 cents at $49.85 a barrel, after
touching $49.97, the highest since mid-October.
"Certainly ($50) is a psychological barrier. There is a momentum,
people will try and push it up over that," said Ric Spooner, chief
market analyst at Sydney's CMC Markets.
A source at oil producer Chevron said on Thursday its activities in
Nigeria had been "grounded" by a militant attack, worsening a
situation that had already restricted the supply of hundreds of
thousands of barrels.
A meeting of the Organization of the Petroleum Exporting Countries
on June 2 in Vienna to discuss the oil market added further support.
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However, the recent rise in oil prices and friction between key members Saudi
Arabia and Iran mean a coordinated effort to intervene to support prices is
slim.
"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," David Hufton, head of PVM Oil brokers, said.
"These are all compelling reasons to expect Saudi production to rise over the
summer months."
(Additional reporting by Keith Wallis in Singapore; Editing by Dale Hudson and
Mark Potter)
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