Oil prices resume drop after fresh highs

9th June 2016, Comments 0 comments

Oil prices hit fresh highs for the year on Thursday, before retreating on profit-taking, according to traders.

Crude hit multi-month high points in Asian trading hours following another drop in US supplies and the prospect of further disruptions to output from key producers Nigeria and Canada.

Benchmark contract Brent North Sea reached $52.86 a barrel -- the highest level for eight months.

US contract West Texas Intermediate (WTI) hit $51.67 a barrel, a near 11-month peak.

Later around 1215 GMT, Brent for delivery in August stood at $51.99 a barrel, down 52 cents compared with Wednesday's close.

WTI for July delivery fell 61 cents to $50.62 a barrel.

Oil prices have almost doubled since hitting near 13-year lows at the start of the year, helped by an easing supply glut as output falls in Nigeria because of unrest and in Canada owing to the country's wildfires.

On Wednesday the US' Department of Energy said US commercial stocks fell much more than expected last week, while Canada is the biggest supplier of oil to the United States.

"The inventory has been dropping for three consecutive weeks, showing that the supply-demand relationship has leaned towards a balance," said CMC Markets analyst Margaret Yang.

Chances of output from Canada picking up in the near term remain slim as fires in northern Alberta, the country's main oil producing region, resulted in at least two companies shutting down production facilities.

In Nigeria, which is a member of the OPEC exporters group, rebels have rejected a truce offer from the government, fuelling fears they will continue attacks on installations that have already halved the country's crude output.

Expectations that the Federal Reserve will not raise interest rates until September at the earliest has meanwhile put downward pressure on the dollar, making dollar-denominated black gold cheaper for buyers holding rival currencies.

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© 2016 AFP

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