Oil eyes $50 mark as reserves drop

New York - Brent was up 60 cents, or 1.3 per cent, at $49.21 a barrel by 1503GMT after a session high at $49.69.

 Oil prices edged towards $50 a barrel on Wednesday after hitting the highest levels this year on a larger-than-expected drop in US stockpiles as wildfires disrupt Canadian crude output.
The US Energy Information Administration said crude inventories fell 4.2 million barrels in the week to May 20. While the decline was steeper than the 2.5 million barrels forecast by analysts in a Reuters poll, it was not as much as the 5.1 million expected by trade group American Petroleum Institute.
Brent was up 60 cents, or 1.3 per cent, at $49.21 a barrel by 1503GMT after a session high at $49.69. The US West Texas Intermediate (WTI) rose 40 cents, or 0.9 per cent, to $49.02, after peaking at $49.62. Oil traded above $100 a barrel in mid-2014 before crashing on a global supply glut.
Wildfires in Canada's oil sands region, as well as a near economic meltdown in Opec member Venezuela and a spate of violent attacks against the Libya and Nigerian energy industries have cut nearly four million barrels per day in global crude flows, Reuters data on supply outages show.
The shortfall has accelerated the recovery in oil prices, which are up nearly 90 per cent from winter lows of around $27 for Brent crude and about $26 for the WTI. "We look for new highs...in carrying this advance higher to around the $52-52.50 area before this spring advance fully plays out," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Co.
"We are definitely moving out of this surplus situation that we've been living in since mid-2014," said Bjarne Schieldrop, head commodities strategist at SEB Merchant Banking in Geneva. "There will still be some time, maybe six months of surplus, but then we're basically into rebalancing." - Reuters
Some argue that the outages are temporary and crude flows will be restored to optimum levels eventually, pressuring prices.
"Maybe it's silly to stand in front of this bus, but I would at least suggest that the bulls be careful here," Scott Shelton, energy broker at ICAP in Durham, North Carolina, wrote in a commentary. - Reuters