The oil price has climbed close to the $50 mark in the latest sign of a recovery in the market after it tumbled to its lowest level for more than a decade earlier this year.
Brent crude reached a six-month high of $49.47 per barrel on Monday. It has not been above $50 since the start of November.
The oil price had plunged close to $27 in January – its lowest level since 2003 – amid a glut of crude supply due to weak demand. It had fallen from more than $115 in the summer of 2014.
The slump has meant cheaper prices at petrol pumps and kept inflation close to zero.
But it has weighed heavily on the North Sea oil industry which has seenthousands of jobs go as well as tumbling profits at FTSE 100 oil majorsBP and Royal Dutch Shell – popular stocks among UK pension funds. Shares in both added 1% in the latest session.
Brent crude has gradually recovered from January’s lows and passed the $40 mark in March.
It has seen further increases in the last couple of weeks and the latest rise came amid worries about supply outages in Nigeria and Venezuela as well as a more positive outlook on the market from analysts at Goldman Sachs.
Goldman had previously warned of oil crashing to $20 a barrel but has now changed its outlook to foresee a shortfall in supply compared with demand “much earlier than we expected”.
“The market likely shifted into deficit in May … driven by both sustained strong demand as well as sharply declining production,” it said.
However, the gains in the oil price during the latest session were held back by data showing a build-up of stockpile at a US storage hub, as well as suggestions of Libya resuming shipments.