Oil prices move lower after hitting 'soft ceiling'

NEW YORK, June 30 (UPI) -- Crude oil prices reversed course in Thursday trading with an investment bank saying the $50 mark may be something of a "soft ceiling" for the long term.

Crude oil prices collapsed from around $100 per barrel in 2014 to below $30 per barrel earlier this year. Prices started recovering toward $50 per barrel over recent months as moderate global economic recovery and lower retail fuel prices eroded some of the oversupply that sparked the downturn.

Short-term positive pressure surfaced in May because of outages sparked by wildfires in Canada and militant activity in Nigeria, among the largest oil producers in the world. A medium-term report from ING in Amsterdam said that, apart from these outages, spending on exploration and production remains low, Iran is recovering from the sanctions era faster than expected and oil inventories, despite recent draws, are still near seasonal highs.

"ING believes prices are now at a soft ceiling and will face headwinds not just in the short term, but also the long term," the report read.

Oil prices collapsed in the two sessions that followed the British vote to leave the European Union. Prices rebounded Wednesday after U.S. data showed a decline in oil inventories, only to retreat again by the start of trading Thursday in New York.

The price for Brent crude oil moved lower by 1.7 percent to open at $49.77 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 2.4 percent to start the day at $48.69 per barrel.

The situation may reverse late in the week depending on the outcome of labor negotiations with Norwegian oil and gas workers. Mediators said that, if talks fail, about 6 percent of the daily oil and gas production from Norway, one of the lead suppliers to the European economy, may be idled. Nevertheless, that's about half what was expected by mediators earlier this week.

Jan Hodneland, the lead negotiator for Norwegian Oil and Gas, said industry leaders should negotiate with efficiency in mind.

"We believe the industry must adapt to a lasting lower level of costs while improving its competitiveness in order to preserve as many jobs as possible," he said in a statement.

On the economic front, European leaders said in introducing their draft budget for 2017 that the focus was on supporting recovery and buffering against security and humanitarian challenges in the region.

"The EU is facing massive challenges and in these difficult times a focused and effective EU budget is not a luxury but a necessity," European Commission Vice President Kristalina Georgieva said.