Oil prices dip after push toward $50 a barrel

Sunday 15/05/2016
Global stocks remain ample

LONDON - World oil prices eased Tuesday after Brent crude had pushed close to $50 a barrel thanks to fading concerns about a long-standing supply glut.

Around 1130 GMT, US benchmark West Texas Intermediate (WTI) for delivery in June was down two cents at $47.70 a barrel.

Brent North Sea for July delivery dropped 30 cents to $48.67 compared with Monday's close.

Brent had Monday reached $49.47 a barrel -- the highest point since early November. WTI struck $48.42, a peak since mid-October, before profit-taking set in.

"A break above $50 in the next few days is very possible," said BMI Research oil and gas analyst Peter Lee.

"In the second half of the year, oil is likely to hold between $45 to $50 a barrel," he said.

Prices are winning support from supply disruptions caused by wildfires in major crude producer Canada, as well as owing to armed attacks against oil facilities in Nigeria.

Wildfires burning around the oil sands hub of Fort McMurray in Alberta, Canada, have been rapidly moving north, forcing firefighters to shift their efforts to protecting existing oil facilities.

In Nigeria, Africa's biggest crude producer, troops have made several arrests following the attacks on an offshore oil facility as the government on Monday moved to avert a labour strike over petrol prices.

"People are looking for any signs possible to confirm that supply is decreasing so any news of unplanned outages gets the market particularly excited," Lee added.

A report by US banking giant Goldman Sachs has meanwhile predicted a short-term supply deficit owing also to production outages in Venezuela, which is deep in political crisis.

Oil prices have rebounded strongly since plunging to near 13-year lows below $30 in February but are still well below peaks of more than $100 a barrel reached in June 2014.

Some analysts however said the disruptions are temporary and noted that the market remains oversupplied.

"Admittedly, these disruptions are large enough that the rebalancing in the market expected in the second half of the year may already be happening," research firm Capital Economics said.

"However, prices could quickly drop back again once at least some of this supply comes back on stream. In the meantime, global stocks remain ample."