Brent crude price nudges above $50 for first time in 2016
The price of Brent crude oil nudged above $50 per barrel on Thursday for the first time in 2016.
Brent crude had climbed as much as 0.7 per cent to $50.08 per barrel in early Asian trading, its highest since early November last year.
The rise was driven by US Energy Information Administration figures released yesterday that showed a decrease in crude stocks, by 4.2m barrels to 537.1m barrels, in the week to May 20. Crude oil imports fell 4.7 per cent to 7.3m barrels per day.
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The price of Brent crude had risen to as much as $49.35 in early trading yesterday before the data, which was higher than analysts' expectations, had been confirmed.
Crude inventories were hit by falling imports due to wildfires in Canada, which led to a loss of about 1.5m barrels a day in production.
Before European markets opened on Thursday, the price had dropped to $49.87, while the US benchmark West Texas Intermediate was trading just below the $50 mark.
"While a move above $50 shouldn't necessarily be an important step, people often talk about oil as trading within certain ranges and so a move out of one – $40-50 in this case – can actually be quite an important psychological shift and be indicative of a more significant move to come, in this case higher," Craig Erlam, senior markets analyst at Oanda, said.
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"With the $50 barrier broken, I imagine we'll hear a lot more talk now about prices hitting $55 or even $60, which in a way can be a little self-fulfilling as it makes traders look at oil from a more bullish perspective.
"Whereas, had oil stumbled again at $50, traders may have seen this as an indication that it is topping out and viewed it a little more negatively."