Oil price hits six-month high

Construction-Energy-Oil-Fuel-700x450.jpgOil prices have risen to a six-month high, jumping 75 per cent since the start of the year, as problems of oversupply wane.

The price of Brent crude rose to $49.06 yesterday, up by $1.23. As markets opened today the price of oil continued to rise towards $50 a barrel, with outages in Nigeria and Venezuela being pegged as the cause.

Attacks by militants in Nigeria have led to production falling, while political problems in Venezuela are leading to a reduction in supply.

The moves have led to a drop in supply, at a time when many were predicting storage for oil would start to run out.

The monthly report from the International Energy Agency, released last week, stated that global oil demand growth for the first three months of the year was 1.4 million barrels a day (b/d), with growth of around 1.2 million b/d for the year.

The agency said year-on-year world output grew by 50,000 b/d in April, compared to a rise of more than 3.5 million b/d a year earlier.

Goldman Sachs, which has been bearish on oil for a while, has now upgraded its forecast for the commodity.

It says: “The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected.”