Oil prices hit their highest in almost six months as traders bet the worst of the rout is over, with the global surplus expected to shrink in the second half of 2016.
International benchmark Brent Crude jumped 1.8% to settle at $51.44 a barrel, while the US WTI crude climbed 1.4% to hit $50.36 a barrel, their respective highest levels since October 2015.
“The price rise is for the most part sentiment, and momentum-driven. Despite speculative overheating, any news that could suggest a higher price is viewed as a good reason to buy,” said Carsten Fritsch, an analyst at Commerzbank.
“What will happen to the production of refined products and crude oil in Venezuela starting at the end of next week is a big question mark,” said Olivier Jakob at consultancy Petromatrix. “The country should continue to be considered as a real and immediate supply disruption risk.”
“The big unknowns are the progression of Opec production for the rest of this year into next and the extent and timing of a stock shakeout when it comes,” said David Hufton at London-based broker PVM.
In recent weeks stoppages in Kuwait, Libya and Nigeria have provided support to the oil price. Crude oil prices rallied after rebels in Nigeria’s Niger Delta vowed to halt output in the country. This was West Texas Intermediate (WTI) first settlement above $50 since July 2015.