A rally that pushed oil prices to a series of 2016 highs since last week had taken a breather over the past two days after minutes of an April meeting showed that the US Fed kept the door open to raising interest rates in June, sending the dollar higher.
A stronger greenback puts downward pressure on oil, as it makes the dollar-priced commodity more expensive, curtailing demand and depressing prices. At around 0615 GMT, US benchmark West Texas Intermediate for delivery in June was up 48 cents, or 1.00 percent, at $48.64 and Brent crude for July gained 39 cents, or 0.80 percent, to $49.20.
Analysts said prices resumed their uptick after the dollar eased and threats of supply disruptions returned to the fore following the bombing of a gas pipeline owned by the Nigerian subsidiary of Italy’s Eni in the latest attack on the country’s oil facilities.
Earlier, a new militant group called the Niger Delta Avengers(NDA) carried out several attacks on key pipelines and facilities operated by oil majors Shell and Chevron, hurting output in Africa’s biggest economy and major crude producer.
Officials said Nigeria’s output had slumped to 1.4 million barrels per day from 2.2 million because of the unrest. The Nigeria disruptions come on top of a reduction in Canada’s output due to wildfires threatening the country’s oil sands region.
“The pause in the dollar rally and continued concerns over supply disruptions in Nigeria are supportive of oil prices,” said Bernard Aw, an analyst with IG Markets in Singapore.
“In addition, Anas Al-Saleh, Kuwait’s acting oil minister… expects the oil market to rebalance in the second half of this year as demand increases. Therefore, it could be only a matter of time before crude pushes beyond $50,” he told AFP.
US Federal Reserve policymakers meet from June 14-15, with investors watching their decision on interest rates. The Organisation of the Petroleum Exporting Countries also meets on June 2 in Vienna, with the market fixed on whether they will take action to reduce the global crude supply glut.