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Oil Prices Tease $50 per Barrel

May 17, 2016 at 17:38 by Andriy Moraru

Oil prices threatened to rise above $50 per barrel on early Tuesday trading as a series of supply interference from around the globe threw the market into a deficit territory.

Brent crude, the international benchmark, traded at a six-month high of $49.46 during intraday Tuesday trading, and at 10:20 GMT had drifted back to $48.89 due to profit taking by some traders.

Similarly, its US counterpart, West Texas Intermediate, rose to $49.42 per barrel during early Tuesday trading, its highest level since October last year.

The current price of oil, at around $48, is a key rebound from mid-February when the black gold was trading at around $26 per barrel, the lowest level reached in about thirteen years.

According to Reuters, Canadian raging wildfires, Nigerian and Venezuelan supply outages, as well as reducing U.S. production have resulted in the reduction of about 3.6 million barrels of the world’s daily output.

Consequently, Goldman Sachs, which hitherto had been warning of oil plummeting to $20 a barrel, made a U-turn on its forecasts. Instead, Goldman now predicts U.S. oil to trade around $50 per barrel during the second half of this year.

If the current supply disruptions continue to be experienced in the market, then the price of oil could close above $50 in the coming trading sessions. A break of this level could expose the $55 resistance level.

If you have any questions and comments on the commodities today, use the form below to reply.

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