USA TODAY International Edition
Oil tops $ 50 a barrel for first time since Oct.
U. S. benchmark oil prices on Thursday topped $ 50 per barrel in intraday trading for the first time since October as the commodity continued its momentum.
The price of West Texas Intermediate oil rose 1.1% to $ 50.09 at 7: 47 a. m. and hovered in that area for much of the morning before dropping back below $ 50.
The commodity briefly slipped below $ 30 per barrel in early 2016 as a global glut of production cratered pricing, triggering bankruptcies of U. S. explorationand- production firms and deficits in oil- rich countries such as Saudi Arabia.
A steady contraction in production among cash- strapped U. S. producers and a corresponding slide in inventories have fueled a rebound. Another factor bolstering prices was the massive wildfire that has undermined Canadian oil production in recent weeks.
“We believe the market has returned to balance in May, with the fundamental correction accelerated by supply disruptions,” Jefferies analyst Jason Gammel said Thursday in a research note. “For the first time in two years we expect that there is more upside than downside in our flat oil price forecasts.”
WTI crude is still down about 66% from its record closing high of $ 145.31 a barrel on July 3, 2008, according to the Oil Price Information Service.
There are no expectations of the rebound sustaining its mo- mentum for much longer.
Oil Price Information Service analyst Tom Kloza said in an email that “I wouldn’t get too excited about” breaking the $ 50 barrier.
“We’ve moved more quickly from $ 26 bbl to $ 50 bbl than most pundits might have thought, but that has occurred largely because of production losses in the Canadian oil sands, Libya, Nigeria, Kurdistan, and even Colombia, with attrition in U. S. shale,” he said.
Capital Economics analysts projected Thursday that the price of Brent crude, the global benchmark, which closely tracks WTI, would fall to $ 45 by the end of 2016. It predicted prices of about $ 60 in 2017.