NEW YORK, May 16 (UPI) -- Simmering concerns about supply shortages across the global energy market pushed crude oil prices sharply higher in early Monday trading.
Sluggish demand from a lackluster global economy had pushed oil lower since the middle of 2014, though the market sentiment is shifting its focus to supplies. Last week, the International Energy Agency said that, after roughly two years, balance was starting to return to the energy market, with production gains slowing at a time when demand from economies like China and India was increasing.
That assessment came as a group calling itself the Niger Delta Avengers said it was able to shut down about 50 percent of the crude oil production in Nigeria, a member of the Organization of Petroleum Exporting Countries. Meanwhile, as much as 1 million barrels per day worth of oil sands production in Canada, the top oil exporter to the United States, are affected by fires in Alberta that the provincial government said remain out of control.
Though operations in Canada are starting to return, the market appears focused more on supply issues than demand in recent sessions. Brent crude oil prices shot up 3 percent in early Monday trading to open the day at $49.24 per barrel, its highest level since October. West Texas Intermediate, the U.S. benchmark, moved up 3.1 percent to $47.64 per barrel.
Ann-Louise Hittle, head of the Macro Oils division at analysis group Wood Mackenzie, said in a phone interview before the start of trading in New York that, after months of downward pressure from lower oil prices, supply concerns are starting to emerge as major market factors.
"The rally is a perfect symbol for how much market sentiment has changed since January," she said.
Hittle said economies in Asia are once again showing signs of growth and further upside potential is possible as summer demand for petroleum products increases in the United States, where lower oil prices have hurt the shale industry.
Though $50 per barrel is within sight, there may be a ceiling to how high prices can go. OPEC said in its market report for May that, despite the supply disruptions and expected declines in non-OPEC production, "fundamentally, oversupply still persists."