Oil prices fall back after breaching $50

AFP - World oil prices slid yesterday, with traders banking profits after crude rose above the key $50 level this week on evidence of lower supplies.

At the same time, analysts warn that Thursday’s move above $50 could trigger some North American producers of crude from shale rock to resume output.

Slumping prices, which saw crude plunge to under $30 a barrel in February from above $100 two years ago, made it unprofitable for some shale companies to compete with traditional producers like OPEC and Russia.

Around 1115 GMT, US benchmark West Texas Intermediate for delivery in July was down 61 cents to $48.98 a barrel.

Brent North Sea crude for July dropped 36 cents to $49.12 a barrel compared with Thursday’s close.Oil prices had topped $50 a barrel for the first time this year on Thursday as production disruptions in Canada contribute to a drop in US crude inventories. Prices have won support also from unrest in Nigeria, Africa’s biggest crude producer. Oil at $50 is viewed as a level at which it makes economic sense for certain suppliers to start pumping again, CMC Markets trader Alex Wijaya told AFP. “Crude oil prices have failed to hold above the $50 level due to concerns that higher prices could unlock more supply,” he said. 

Traders are now eyeing next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna to discuss world production levels. “There is probably a sliver of hope that OPEC producers will hammer out an agreement to support oil prices, be it to freeze production or otherwise,” said IG Asia analyst Bernard Aw. OPEC member Iran, which returned to world markets in January after the lifting of Western sanctions linked to its nuclear programme, has so far refused to curb production. Tehran’s stance appeared to reinforce market doubts that OPEC would in fact take any firm action to curb chronic oversupply.