Crude oil prices hit $55 a barrel earlier today, their highest price in a month, before slipping back down as new Energy Information Administration (EIA) figures showed a build in US stockpiles.
The EIA said the US added 1.6m barrels last week, which was well above the 100,000 barrel drawdown analysts were expecting.
Benchmark Brent crude prices retreated to $54.30 a barrel from an intra-day high of $55.09 a barrel after the EIA data was released. West Texas Intermediate (WTI) prices fell to $50.97 a barrel from a high point of $51.88 a barrel.
David Morrison, senior market strategist at SpreadCo, said:
"The question now is how much more upside there is in the current move. Undoubtedly, the market is more balanced than it was during the sell-off as the excessive long-side speculative positioning that was seen prior to last month’s slump has been covered.
"WTI and Brent still have a few dollars of upside each before they hit significant resistance. But fresh buyers will want to see concrete moves to extend the output cut agreement between Opec and a number of non-Opec producers beyond June. Without this, we could see a limit to further gains particularly if the US rig count continues to rise, and if inventories don’t start to decline significantly."
The Organisation of the Petroleum Exporting Countries (Opec) cuts aim to reduce output by around 1.8m barrels per day (bpd) to prop up prices and cut the global oversupply.