Oil eases below $49 after reaching six-month high

18/05/2016 04:51 AST

Oil slipped from a six-month high to trade below $49 per barrel on Tuesday after a deal between Libyan factions brought higher output a step closer, although outages in Nigeria and Canada lent support.

The Libyan factions agreed in principle at talks in Vienna to have one oil organi`ation. Most of the OPEC member’s output is offline because of conflict. Traders were also eyeing the restart soon of some of the shut Nigerian output.

Brent crude traded at a six-month high of $49.47 intra-day and at 1201 GMT was down 17 cents at $48.80. US crude was up 11 cents at $47.83, having reached $48.42, its highest since October.

Profit-taking by some investors could be prompting some weakness in prices on Tuesday, but further price gains are likely given the supply losses, Commerzbank said.

“I expect prices to take a shot at $50,” said Carsten Fritsch, analyst at Commerzbank. “The outages in Canada and Nigeria alone are probably enough to leave the global oil market undersupplied at present.”

Beside unplanned outages, supply from non-OPEC countries is expected by the International Energy Agency and other forecasters to fall this year and output in some OPEC nations such as Venezuela is suffering because of a cash crunch.

“Globally, there are still a lot of supply disruptions and this comes on top of natural declines,” said Olivier Jakob, oil analyst at Petromatrix. “It does bring forward the expected rebalancing in the second half.”

Oil is still only half its level of mid-2014, when concern about excess supply prompted prices to begin a decline from over $100, and high inventories have limited the response of prices to the outages.

Arab News