Market Watch
WTI Crude Tops $50 For First Time Since October Amid Supply Disruptions
26 May 2016 - 07:46 PM
It happened — after weeks of dancing teasingly close to the $50 handle, Brent and WTI crude finally broke above the key mark.
WTI and Brent Crude oil prices have both broken above $50 for the first time since October 2015 this morning - almost doubling off its Feb 11th 26.05 lows. The immediate catalyst appears to be a combination of inventory drawdowns in US crude, continud US production cuts, and further supply disruptions (Nigeria specifically), none of which scream demand or growth is going to make a dent in the glut.
But since the winter, both Brent and West Texas Intermediate have staged a remarkable rebound, scoring gains of around a whopping 80%. Not bad for any asset class, this whole low-yield world considered.
As Bloomnerg notes, other factors seen driving prices higher include:
- Canada wildfires said to cut 1m b/d or more of oil sands output; output still returning
- Nigeria oil output slumps to 20-yr low amid series of attacks
- Venezuela has difficulties maintaining output amid power cuts, restriction of field services and theft
- U.S. active oil rig count shrinks to least since Oct. 2009
- IEA raises 2016 world oil demand fcast by 100k b/d to 95.9m b/d, non-OPEC supply to drop 800k b/d to 56.8m; “global supply surplus of oil will shrink dramatically later this year”
