Brent futures rose above $50 a barrel on Thursday on signs that the global oversupply may soon come to an end. It is the highest in nearly seven months, and it come a week before OPEC’s next meeting.
The Organization of the Petroleum Exporting Countries is scheduled to meet in Vienna on June 2.
U.S. government figures released on Wednesday showed that crude stocks dropped by 4.2 million barrels in the week leading to May 20. It represents the biggest decline in seven weeks, which beat analysts forecasts of 2.5 million barrels.
This boosted investor sentiment, pushing global benchmark Brent (LCOc1) to $50.26 a barrel. It stood at $50.01 a barrel at 0829 GMT, up 27 cents from the previous day’s close.
U.S. crude futures (CLc1) also went up, adding 19 cents at $49.75 a barrel, after hovering near of $50 at $49.97.
Production outages in Canada, Libya and Nigeria have factored greatly in the easing of the world’s oversupply.
New York-traded oil have recovered and are up roughly 85% since plunging to 13-year lows at $26.05 in February as falling U.S. shale output boosted investor confidence.
Analysts, however, caution that prices now make drilling economical again for some producers, which could lead to higher oil rig count in the U.S. and in turn, slowing down the decline in U.S. production.