NEW YORK CITY – Oil prices rose above $50/bbl Tuesday on a weaker dollar and ongoing supply disruptions, according to a report by the Wall Street Journal.
US crude oil for July delivery recently rose 33 cents, or 0.7%, to $50.02/bbl on the New York Mercantile Exchange. Brent, the global benchmark, rose 36 cents, or 0.7%, to $50.91/bbl on ICE Futures Europe. Both are on track to settle at 2016 highs.
Prices have nearly doubled since hitting 13-year lows earlier this year as companies have slashed spending on new drilling, and unplanned outages in Nigeria and Canada helped reduce the global oversupply of crude.
Some investors and analysts say prices can continue to rise if investors who had bet on lower prices close out their wagers as prices top $50/bbl.
The WSJ Dollar Index, which tracks the dollar against a basket of other currencies, recently fell 0.3%. A weaker dollar can make oil—which is priced in dollars—cheaper for foreign buyers, increasing demand.
Concerns about supply disruptions also boosted prices. In Nigeria, a group calling itself the Niger Delta Avengers, which has been bombing pipelines, vowed on its purported Twitter account to reduce the country’s production to zero, the report noted. The campaign by the Avengers has taken as much as 1 MMb/d of Nigerian supply out of the market, meaning that Angola has now replaced the country as Africa’s leading producer.
The number of rigs drilling for oil in the US rose by nine last week, the first increase in 11 weeks, according to Baker Hughes Inc. In addition, the oil field services firm said Tuesday that the number of rigs drilling for oil and natural gas in countries excluding the US and Canada increased in May compared with April.
Share your news with Offshore at firstname.lastname@example.org