The price of oil briefly rose above US$50 a barrel on Thursday for the first time since October.
However, after reaching a high of US$50.21 in pre-market trading, benchmark North American crude closed down eight cents at US$49.48 a barrel.
Still, analysts say this marks the beginning of higher oil prices for the remainder of the year.
“The story, in my view, that is unfolding couldn’t be simpler: supply is falling, demand is rising and presto, the oversupply will flip into a supply deficit,” Jan Stuart, a global energy economist with Credit Suisse, told Business News Network Thursday.
“And then all of the second half of the year we should see big inventory draws.”
The rising crude prices also gave the Canadian dollar a boost, which was up .22 cents Thursday, closing at 77.10 cents US.
However, Stuart noted that oil production in Canada will be “materially affected for weeks to come” due to disruptions caused by the Alberta wildfires.
“And we haven’t seen half of it reflected in American inventories,” he added.
Stuart said that full oil production in Canada may not resume until July 1. And Nima Billou, an energy analyst with Veritas Investment Research, said that crude needs to hit at least US$60 to $65 per barrel in order for production to be feasible.
Oil production has also been disrupted in Nigeria because of attacks by militants, as well as in Venezuela, where an economic crisis has led to massive power cuts. Meanwhile, oil demand has been stronger than expected, especially in the United States. According to the U.S. Energy Information Administration, fuel demand in the U.S. rose to 9.6 million barrels per day last week.
The Toronto Stock Exchange's S&P/TSX composite index closed down 4.54 points at 14,049.20.
With files from The Canadian Press
