Brent crude oil prices rose to $50 a barrel on Monday, lifted by a plunge in the U.S.-dollar that could spur demand, just as ongoing attacks on oil infrastructure in Nigeria tighten supplies.
International Brent crude futures were trading at $50.03 per barrel at 0139 GMT (09:39 p.m. EDT), up 39 cents or 0.8 percent from their last settlement. U.S. West Texas Intermediate (WTI) crude futures were up 49 cents or 1 percent at $49.11 a barrel.
Traders said that the higher oil prices were a result of a sharp fall in the dollar on Friday, when the greenback lost over 1.5 percent intra-day against a basket of other leading currencies.
The drop followed soft U.S. jobs data that sparked concerns over the state of the world’s biggest economy, but a weaker dollar is seen as supporting fuel demand in the rest of the world as it makes dollar-traded oil imports cheaper.
“The weaker U.S.-dollar drove commodity prices higher,” ANZ bank said on Monday.
The beginning of the Muslim holy month of Ramadan on Monday is also seen as supportive of prices as driving demand picks up in most Muslim dominated countries.
Traders said frequent attacks on oil infrastructure in Nigeria, which has already pulled the country’s output to over 20-year lows and which rebels said could fall to zero soon, were also supporting oil prices.
So far, supply cuts like those in Nigeria or Libya, have been met by rising output in the Middle East, especially Iran, which has been ramping up its output following the end of international sanctions against it in January.
But Iran’s is returning to international oil markets more quickly than expected – including using international tanker operators to ship its crude – and is fast hitting its maximum capacity.
This means that further disruptions in global supplies might not be compensated by rising Iranian output.
The price rally, however, was capped on signs of increased output.
U.S. energy firms this week added rigs drilling for oil for the second time this year, energy services company Baker Hughes Inc said on Friday, as producers cautiously upped activity following months of rising prices.
Drillers added nine oil rigs in the week to June 3, bringing the total rig count up to 325, compared with 642 a year ago, Baker Hughes said in its closely followed report.