Brent crude oil price edges away from $50 a barrel
Brent crude edged away from the $50 mark in early afternoon trading, despite worries about the situations in Canada and Nigeria sent investors into a buying frenzy.
Brent crude was down 0.4 per cent at $48.60 at lunchtime, while WTI crude – the US benchmark – was down 0.2 per cent, at $48.04.
That was a reversal of gains in early trading. Both benchmarks have been sent up in recent days by a disruption to supply in Canada, where wildfires have engulfed more than 1,800 square miles, although yesterday firefighters reported a shift in winds had pushed the fires away from Alberta's oil sands region.
Meanwhile, ExxonMobil reported yesterday that oil operations at one of the country's largest plants had been disrupted by "criminal activity". Last week it was interrupted by damage to a pipeline.
"The first attempt to break through $50 in Brent was unsuccessful but… given yesterday’s rebound off the lows, we could see another push today," said Craig Erlam, senior market analyst at Oanda.
"If $50 is pierced today, the next test for Brent would be $51-51.50, a key zone of support and resistance during the decline back in October and November."
Yesterday Brent crude slid below $48 as the dollar strengthened following hawkish minutes from the Federal Reserve's Open Markets Committee.
But the general consensus is that oil is beginning to look stronger: earlier this week, Goldman Sachs upgraded commodities including oil to neutral on a three-month basis, citing supply disruptions.
At the same time, it downgraded equities.
"Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels," Goldman analysts wrote in a note.
"Our equity strategists have become more defensive, owing to heightened drawdown risk and growth scarcity."