Brent oil futures rose above $50 per barrel on Thursday, a first in the last seven months after U.S. government data highlighted a larger than expected drop in crude stocks during the prior week.
Positive stock markets during the week supported the increase with the FTSE 100 performing positively in the last two days alongside the Dow Jones industrial average, the S&P 500 .SPX and the Nasdaq Composite which all saw increases on Wednesday.
At 2 AM GMT Brent LCOc1 rose by 31 cents hitting $50.05 a barrel, its highest point since November 4th 2015 with it closing It ended the session up 2.3 percent at $1.13.
U.S. crude futures CLc1 increased by 23 cents moving to their highest price since October 12th 2015 at $49.79 a barrel, after futures rose 94 cents in the prior session.
Ric Spooner, chief market analyst at Sydney’s CMC Markets said:
“Certainly ($50) is a psychological barrier. There is a momentum, people will try and push it up over that.”
“(From a) practical point of view will there or will there not be a sustainable increase above $50? At the $50-$55 range there has got to be a good chance of seeing the peak.”
He did add that globally oil was still in a period of oversupply although disruptions in Libya and Nigeria and Canadian wildfires were major drivers the price increase and positive sentiment from investors.
U.S. data showed that crude stocks reduced by 4.2 million barrels to 537.1 million in the week ending May 20th, the biggest drop seen on a weekly basis in seven weeks according to the Energy Information Administration on Wednesday.
Analysts were expecting a fall of 2.5 million-barrels whilst the American Petroleum Institute had higher expectations of 5.1 million barrels.
Gasoline stocks increased by 2 million barrels to 240.1 million barrels compared to expectations of a drop of 1.1 million-barrels according to the data. Distillates which encompass diesel and heating oil saw stockpiles reduced by 1.3 million barrels to 150.9 million. Crude oil imports dropped by 4.7 percent to 7.3 million bpd during the week.
Adding to the momentum BMI Research released a report on Thursday which highlighted that Asian countries such as Indonesia, Malaysia and Vietnam would become net crude importers during the next five years as they alongside to Cambodia and Brunei bring an increase of 500,000 barrels per day in refining capacity during the coming decade.