Crude oil rallied after data showed U.S. stockpiles declined more than forecast at a time when output is shrinking in Nigeria and Venezuela.Brent crude traded above $50 a barrel for the first time since November, giving a lift to the currencies of oil-exporting nations and Asian energy stocks. European equity index futures fell as gold rebounded from a seven-week low amid a retreat in the dollar. Brent (LCON6 +0.88%) , the international benchmark for oil, rose 30 cents to $50.04 a barrel in morning Asian trade, its highest point since the beginning of November. U.S. oil prices traded on the New York Mercantile Exchange (CLN6 +0.71%) rose 29 cents to $49.85 a barrel. In addition, attacks in Nigeria have cut the nation’s production to the lowest in more than two decades and Venezuela is struggling to maintain output amid power cuts. U.S. output also fell for the 11th straight week to 8.8 million barrels a day from a peak of 9.7 million barrels a day in April 2015.
Certainly ($50) is a psychological barrier. There is a momentum, people will try and push it up over that. From a practical point of view will there or will there not be a sustainable increase above $50? At the $50-$55 range there has got to be a good chance of seeing the peak.
However, some analysts say the rally is unlikely to last, given that major producers — especially those in the Organization of the Petroleum Exporting Countries — are likely to keep production high. The rising price makes an OPEC production cut even less likely at a coming June 2.