Oil prices have risen above $50 a barrel for the first time in nearly seven months as the cost of crude continues to bounce back.
Benchmark Brent crude rose 1 per cent to $50.22 at one stage, its highest level since early November, after supply disruptions and an increase in global demand.
US government figures showed a larger-than-expected drop in fuel stockpiles last week, which sparked the latest surge in oil prices.
Crude has been rebounding sharply after a lengthy rout, soaring 80 per cent since hitting a low of below $28 US dollars a barrel at the start of the year amid a global supply glut.
The rally has been sparked by supply disruptions following fires in Canada, as well as recent talks between Opec and Russia about freezing production.
Connor Campbell, financial analyst at Spreadex, said: “The black stuff is continuing to benefit from the various oil production-interrupting events across the globe, from supply disruptions in Nigeria to the tragic wildfire in Canada.
“The most recent catalyst was something far more banal, however, a drop in US crude inventories helping Brent nudge above that landmark level.”
Michael Hewson, chief market analyst at CMC Markets, said: “We do now appear to be seeing the effects that the decline in US output is having, and while supplies remain elevated, the glut does now appear to be diminishing.”
The rising cost of crude has been helping stock markets recover after a turbulent start to the year, with London’s FTSE 100 Index 13 per cent higher than its recent low in February, when it slumped to its lowest level for three-and-a-half years.
But there are fears the price rally may not be sustained. Craig Erlam, senior market analyst at OANDA, said: “While supply disruptions are likely to continue to support prices for now, a further strengthening in the dollar over the next couple of months could act as something of a counterweight and keep prices in check.”