Oil prices hit 7-month high, rise above $50 a barrel as global supply glut eases

Oil prices climbed above $50 a barrel on Thursday for the first time in nearly seven months as a global supply glut that plagued the market for nearly two years showed signs of easing.

Oil prices have rallied in recent weeks after a string of outages, due mainly to wildfires in Canada and unrest in Nigeria and Libya, knocked out nearly 4 million barrels per day of production.

Above $50 a barrel, oil was seen by many market players as breaching a psychological barrier that could lead producers, particularly among U.S. shale companies, to revive operations scrapped in recent years.

Global benchmark Brent crude oil LCOc1 was up 56 cents at $50.30 a barrel at 1220 GMT, having reached $50.71 the highest in nearly 7 months, after a larger-than-expected draw in U.S. crude oil inventories last week indicated buyers are starting to mop up spare supply.[EIA/S]

U.S. crude futures CLc1 were up 48 cents at $50.04 a barrel, after touching $50.21, the highest since mid-October.

“Certainly ($50) is a psychological barrier. There is a momentum, people will try and push it up over that,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets.

A source at oil producer Chevron said on Thursday its activities in Nigeria had been “grounded” by a militant attack, worsening a situation that had already restricted the supply of hundreds of thousands of barrels.

A meeting of the Organization of the Petroleum Exporting Countries (OPEC) on June 2 in Vienna to discuss the oil market added further support.