(MENAFN- AFP) Brent crude rose past $50 a barrel for the first time this year on Thursday, after a fall in US inventories that added to global disruptions which have put a dent in a chronic oversupply.
Prices nosedived from above $100 a barrel two years ago to around $27 in early 2016 due to a massive glut -- badly hurting producing nations but meaning lower prices at the pump for consumers.
However the market has rebounded on the back of disrupted production in Canada due to wildfires, outages in Venezuela, and unrest affecting energy infrastructure in Nigeria -- Africa's biggest oil exporter.
Both main contracts had been edging close to $50 for the last fortnight but a strong US dollar curtailed gains, as a firmer greenback makes the dollar-priced commodity more expensive, hampering demand.
The surge in Asian trade came after the US Department of Energy said Wednesday that US commercial crude oil inventories fell by 4.2 million barrels in the week to May 20.
Canada's central bank also announced that the fires in its western provinces, which a major supplier of crude to the US market, would impact the country's economic output numbers.
At 0715 GMT, Brent, the European standard, was up 34 cents at $50.08 a barrel, while US benchmark West Texas Intermediate was not far behind, trading 28 cents higher at $49.84.
"News about the US inventory, coupled with Canada's announcement gave prices the boost it needed to push past the $50 mark," CMC Markets trader Alex Wijaya told AFP.
- Respite for producers -
Traders will now be watching to see if the price can be sustained despite the strong US dollar.
Shailaja Nair, associate editorial director at global energy information provider Platts, told AFP it also remains to be seen whether oil producers will find respite after prices breached the $50 mark.
"There's a little bit of demand but not like suddenly we've found a huge pocket of demand, we are not seeing that. Whether it will stay above $50 or not, that is going to tell us whether the producers can breathe a sigh of relief,'' she said.
Traders are eyeing a June 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna where it is hoped a deal on reducing production can be reached.
But OPEC member Iran, which only returned to world markets in January after the lifting of Western sanctions linked to its nuclear programme, has so far refused to curb production.
Tehran's stance appeared to reinforce market doubts that OPEC will take any firm action to curb oversupply.
Talks in Doha in April involving OPEC members and other major producers such as Russia failed to reach a deal to cap production.
Other analysts are also sceptical about how long the current prices will hold.
"The remarkable over 80 percent rally in oil since earlier this year may have been overdone, as the underlying macro conditions have not changed proportionally," IG Markets analyst Bernard Aw said in a client note.
"This suggested that speculative trades have driven up the price these months, and may not be sustainable."
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