Oil Price Climbs 2016 High Buoyed By Plunging Supply, Feeble Dollar

Brent crude futures were up 36 cents on the day at $50.91 a barrel by 1339 GMT, having hit an intraday peak of $51.30 earlier in the day, their highest since October.

U.S. crude oil futures gained 32 cents to trade at $50.01 a barrel, having touched a fresh 2016 peak of $50.37, their highest since October last year.

The price of oil has nearly doubled since January, when it hit its lowest since late 2003, boosted largely by a spate of unforeseen outages that have eroded production in Canada, Venezuela, Libya and Nigeria, along with a steady decline in higher-cost U.S. shale output.

Yet analysts say the rally may entice some shale production back online, potentially damaging the prospects for a more sustained price rise.

“I think that is a bit of a risk right now,” Petromatrix analyst Olivier Jakob said.

“Last year, there was also a rally into June and that came to an end when the U.S. rig count started to increase … if we have another increase this week and another next week, then it will be harder to sustain the rally because there will be a perception that we’re back to production economics,” he said.

Market watchers are bracing for signs of a pick-up in U.S. oil production after weekly data from Baker Hughes showed U.S. drillers added rigs for only the second time this year, analysts said.