The oil price has broken through the $50 a barrel mark for the first time since November last year.
The price of Brent Crude broke through $50.13 a barrel, with the US benchmark West Texas Intermediate rising to $49.93. The move marks an 80 per cent price rise in Brent crude since lows in January.
Price rises were driven by supply concerns, with Canada and Nigeria seeing a drop in supply. Wildfires in Canada have knocked back the country’s supply by around 1 million barrels a day, while military action in Nigeria has hampered supply.
Supply issues have helped to drive the oil price higher in recent weeks. Earlier this month the attacks in Nigeria and political problems in Venezuela led to a reduction in supply, with the oil price hitting a six-month high on 17 May.
Axa Wealth head of investing Adrian Lowcock says the oil price is now likely to stay around the $50 mark for the rest of the year.
“Investors should be careful now when considering investing in oil as the easy money has been made. The price has recovered rapidly but is still someway off its peak and could remain volatile.
“The effects of the weaker oil price have not played through the oil sector or been fully reflected in companies’ profits and losses. At $50 a barrel oil majors will be feeling more comfortable and dividends will be better supported but oversupply issues could quickly return.”