Oil prices rose to fresh highs for the year, supported by easing concerns about a supply glut.
Brent crude closed on Tuesday at $51.44 a barrel, up 1.8 per cent on the day and the highest close since last October. WTI oil gained 1.4 per cent to settle at $50.36 a barrel on Tuesday, its first close above $50 since July 2015.
Oil has almost doubled from wintertime lows on news of unplanned supply interruptions, a slow decline in output from US shale formations, and robust consumption from drivers enjoying cheap prices.
Unplanned supply outages in May averaged around 3.7m barrels per day, including about 800,000 b/d lost due to militant attacks on oil pipelines in Nigeria. Also, disruptions to oil production due to wildfires in Canada’s oil sands led to lower supply.
In the US, crude oil production has declined by more than 900,000 b/d since April 2015 to about 8.7m b/d last month.
Meanwhile, fuel demand has been on the rise, thereby indirectly helping lift oil prices. Petrol consumption was poised to shatter records this year. US commercial crude inventories last week slid by 3.6m barrels but remained well above 500m barrels, according to a broker report on American Petroleum Institute data released late on Tuesday. The government is due to release more definitive stocks data on Wednesday.
Source:: Oil prices rise to fresh 2016 highs