Oil prices rallied for a third straight session on Wednesday to new 2016 highs above $50 a barrel on relentless sabotage of oil supplies in Nigeria and ahead of US crude inventory data likely to show draws.
Data from showing May crude oil imports in China at their highest in more than six years also boosted prices as it fed hopes that energy demand was stabilizing in the number two economy and also the world’s second-largest oil consumer.
The dollar’s drop to five-week lows on waning expectations for an imminent US rate hike also added to interest in greenback-denominated oil from holders of the euro and other currencies.
Brent crude futures rose $1 to $52.44 a barrel by 9:45am EDT, after reaching $52.47, their highest level since October.
US crude’s West Texas Intermediate futures were up 88 cents at $51.24 a barrel, after rallying to $51.27, their highest since last July.
“The trend is your friend and picking tops can be painful as all of the money out there chasing trends from the systematic side of the market can overwhelm,” said Scott Shelton, broker at ICAP in Durham, North Carolina.
“That seems to be happening here and being driven by Nigeria outages and trade buying as they pull barrels from inventory.”
The Niger Delta Avengers militant group in Nigeria, which has brought oil output in Africa’s largest producer to a 20-year low, said it had blown up a Chevron oil well as it rejected peace talks with the government.
The rebel assault came ahead of weekly crude inventory data from the US government, likely to show draws.
Analysts polled by Reuters have forecast a decline of 2.7 million barrels in US crude last week while trade group American Petroleum Institute has indicated the drop could be as large as 3.6 million barrels.
The US Energy Information Administration will issue official inventory data at 10:30am EDT.
(Source: UPSTREAM)