Oil has reached above $50 (£33.97) per barrel for the first time in 2016 as investors balance the impact of disruptions to the supply.
Figures released by the US government show a drop-off in crude oil inventories in the week commencing May 16.
ICE Brent crude was up 0.8% with a price of $50.13 (£34.06) in Asia on 26 May, whilst West Texas Intermediate in the US also swelled by 0.8% to $49.93 (£33.91) per barrel.
Speaking about the gains to the Financial Times, Société Générale analyst Michael Wittner said:
“We expect global crude markets to continue to be driven by supply disruptions, especially in Nigeria and Canada.”
Wildfires are believed to have minimized Canada’s oil production by about a million barrels per day in May, and militant activities have reduced Nigerian output to under 1.4 million barrels per day, which equates to a drop of 40% from the African country’s recent peak.
The price of crude oil has nearly doubled since it hit a 12-year low at the start of the year, due mostly to the belief that the oil market will begin to rebalance as the amount of high cost oil available for purchase declines, and consumption by motorists and other oil purchases help to get excess stocks under control.
This is good news for big oil companies like Royal Dutch Shell and Fuchs, who make products like Shell Omala S2 G 320 and Fuchs Ecocool Ultralife A respectively, as they were uncertain times in a turbulent oil market.