US oil price hits 2016 high on hopes of lower inventories

[NEW YORK] World oil prices rose Tuesday, with US crude striking a seven month high as traders expect data showing a decline in American commercial inventories and weigh production problems in Nigeria.

"The price of crude oil snapped a two-day slump on Tuesday ahead of an expected draw in US weekly inventories from API data," said CMC Markets analyst Jasper Lawler.

Investors awaited the American Petroleum Institute's report on US crude inventories last week, due later Tuesday, and the official data for that week from the US Department of Energy on Wednesday.

Expectations are running unusually high for a decline in US supplies, given the wildfires that have interrupted oil production in Canada, the biggest supplier of crude to the United States.

US benchmark West Texas Intermediate for July delivery advanced 54 US cents to US$48.62 a barrel on the New York Mercantile Exchange, the highest closing price since October.

In London, Brent North Sea oil, the European benchmark, for July delivery finished at US$48.61 a barrel, up 26 US cents from Monday's settlement.

Bob Yawger of Mizuho Securities USA noted that prices were supported Italian oil company Eni's force majeure declaration after attacks over at its Brass Rivers terminal in Nigeria, in essence saying it cannot guarantee production to customers.

Crude prices have rebounded since plunging to near 13-year lows below US$30 a barrel in February amid abundant global supplies. But they are still well short of peaks of more than US$100 reached in June 2014.

"Overall the market is still in an uptrend, with the thought process that in the longer term things will balance out and tighten up," said Kyle Cooper at IAF Advisors.

AFP