For the first time in 7 months, the price of oil has risen above $50 per barrel, as declines in the US inventories raised hopes that the market is inching toward a balance.
According to reports from the Wall Street Journal, the outcome came in after the inventory data released by the US department of Energy on Wednesday showed a 4.2 million barrel reduction in oil stocks. A weaker US dollar also supported prices; the Wall Street Dollar index, which tracks the greenback against a basket of other currencies, fell 0.2%.
The move above $50 can be seen as providing a psychological boost to a market that has been trading below that level for the past 6 months now. As oil is priced in dollars, it has become more accessible to holders of other currencies as the dollar falls.
The oil market heaves a sigh of relief as it has been plagued by supply disruptions around the globe: Wildfires in Canada, unrest in Libya as well as destruction of oil facilities in Nigeria.
Global benchmark Brent crude oil LCOc1 was up 56 cents at $50.30 a barrel at 1220 GMT, having reached $50.71 the highest in nearly 7 months. US crude futures CLc1 were up 48 cents at $50.04 a barrel, after touching $50.21, the highest since mid-October.
A meeting of the Organization of the Petroleum Exporting Countries (OPEC) on June 2 in Vienna to discuss the oil market boosts support. However, the recent rise in oil prices as well as the tension between Saudi Arabia and Iran indicate a joint effort to intervene in support prices is slim.
Where does Nigeria stand in all this?