U.S. benchmark oil prices reached a staggering $50 for the first time in May, as the West Texas Intermediate also stayed close to the $50 per barrel price of $49.48 for the majority of the day.
The oil economy is still making a slow but steady recovery since the global drop in oil prices during the first part of 2016, where oil was as low as $30 per barrel forcing many foreign operators to pull out of servicing oil fields and in some cases going completely bankrupt or accumulating a large deficit as was the case for Saudi Arabia. Otherwise natural disasters have also affected oil production as was the case for Canada, recently with the violent wildfires that caused a halt in oil production.
Jefferies analyst Jason Gammel recently noted in his research, "we believe the market has returned to balance in May, with the fundamental correction accelerated by supply disruptions, for the first time in two years we expect that there is more upside than downside in our flat oil price forecasts."
Yet, analysts such as Tom Kloza of Oil Price Information Service stated, "I wouldn’t get too excited about" breaking the $50 barrier. We’ve moved more quickly from $26 bbl to $50 bbl than most pundits might have thought, but that has occurred largely because of production losses in the Canadian oil sands, Libya, Nigeria, Kurdistan, and even Colombia, with attrition in U.S. shale, the next $5 (per barrel) in increases may be akin to bettering the Bob Beamon long jump."