Oil Hits Fresh 8-Month Highs on Shrinking Supplies, Nigeria Woes

Oil Hits Fresh 8-Month Highs on Shrinking Supplies, Nigeria Woes

Oil benchmarks on both sides of Atlantic extend its winning streak into a third day today, with the bulls relentless amid US drawdown and Nigerian political tensions.

WTI holds $ 50 mark

Currently, both crude benchmarks are trading modestly higher at multi-month peaks, with Brent at 51.52, while WTI hovers around 50.50 levels. Markets are cheering a break above $ 50 mark for both crude benchmarks, which favourable supply-side fundamentals also keep the prices buoyed.

The black gold jumped higher after the weekly inventory report from API showed a bigger than expected drop in the crude stockpiles.  The US crude inventories shrunk by 3.6 million barrels over the week to June 3, which was a bigger fall than the expected 2.7 million barrels drop.

Moreover, ongoing political tensions in Nigeria also continue to fuel supply disruption concerns and hence, collaborate to the bullish tone around oil prices. Nigeria's crude oil output slumped to a 20-year low after the southern Delta swamps in the country have been hit by rebel attacks on oil and gas pipelines.

Furthermore, extension of the losses in the greenback against its major competitors also added to the upside in oil.  A relatively weaker US dollar makes the dollar denominated oil cheaper in other currencies.

Next in focus remains the official government (EIA) crude reserves data due later today for fresh direction on the commodity.  Markets expect a fall of about 3.26 million barrels, which would be a third straight weekly decline.