SINGAPORE: Oil prices rose early on Friday, with Brent jumping back above $50 per barrel, as investors positioned themselves for more price increases this year in expectation of a tighter market.
International Brent crude oil futures were trading at $50.04 per barrel at 0026 GMT, up 33 cents from their last settlement. U.S. West Texas Intermediate (WTI) crude was up 28 cents at $48.61 a barrel.
Traders said the higher prices were a result of a tightening physical market, in which large oversupply that led to the 2014-2016 price slump was now being brought back into balance.
A further easing of monetary policy expected on the back of Asia’s slowing economies and because of Britain’s vote to leave the European Union was also seen as a reason for financial traders to put money into commodities, which saw one of the strongest quarterly performances in years in the second quarter of 2016.
“The specter of further easing in monetary policies around the world continues to support commodity markets. With quarter-end selling also behind us, investors positioning should start to turn more bullish,” ANZ Bank said on Friday.
Prices were also supported by physical markets. Despite oil output from the Organization of the Petroleum Exporting Countries (OPEC) rising to a record 32.82 million barrels per day (bpd) in June, OPEC expects demand for its supplies to be higher still.