Oil price increase as crude hits $50 per barrel

ITRealms:

For the first time this year, oil prices have risen above $50 per barrel, which is almost doubling of prices since 12 year lows in January and a return to levels seen in November last year. This happened as a result of supply disruptions and a decline in crude inventories in the United States, ITRealms reports.
Canada experienced a decline in output of about 1 million barrels a day this month, after wildfires hit production, while, militant activity in Nigeria has also reduced output by 40 per cent to 1.4 million bpd.

However, OPEC’s meeting, which is to be held on  the 2^nd of June, remains to be the key risk factor in the short term as markets are enthusiastic to know whether an agreement on a possible oil freeze will see the light.

However, analysts have said that higher prices could mean some producers increase supplies and make more expensive production methods, like shale, viable again.

According to Citibank, “The return of US oil production on the back of higher oil prices, cost deflation across the sector, and Saudi Arabia’s intentions to raise crude production and exports are headwinds to a price rally,” Last year, prices rallied from January to May before collapsing again.

Okoli Vincent/GEE


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