Brent North Sea crude for July delivery was up 33 cents at $50.07 a barrel while US benchmark West Texas Intermediate was trading 29 cents higher at $49.85, reports The Telegraph.
The $50 price point is a key level and traders are watching to see if it can be sustained.
The gains came as markets digested news that US commercial crude oil inventories fell by 4.2 million barrels in the week to May 20, according to US Department of Energy data.
This is largely due to wildfires in the western provinces of Canada – the biggest supplier of crude to the US market – which have curbed oil production.
Canada’s central bank had also announced on Wednesday that the fires would impact the country’s economic output numbers.
“News about the US inventory, coupled with Canada’s announcement gave prices the boost it needed to push past the $50 mark,” CMC Markets trader Alex Wijaya told AFP.
Both pricing standards have been edging close to the $50 mark for a fortnight but a strong US dollar had curtailed gains.
A firmer greenback, which has been performing stronger against major currencies, makes dollar-priced commodities like oil more expensive, hampering demand.
Some analysts are sceptical about how long the current prices will hold.
Aside from the stronger dollar, major exporter Iran has vowed to keep up oil production after the lifting of Western sanctions in January, further fuelling the supply glut.
“The remarkable over 80pc rally in oil since earlier this year may have been overdone, as the underlying macro conditions have not changed proportionally,” IG Markets analyst Bernard Aw said.
“This suggested that speculative trades have driven up the price these months, and may not be sustainable.”
The global oil market nosedived from above $100 a barrel two years ago to around $27 in early 2016, plagued by a stubborn glut.
Prices have since rebounded, aided by the weeks of wildfires in Canada as well as unrest affecting energy infrastructure in Nigeria, Africa’s biggest oil exporter.
Markets are now eyeing a meeting on June 2 of the Organisation of the Petroleum Exporting Countries in Vienna where it is hoped a deal on reducing production can be reached.
But Iran’s firm opposition to any production caps appear to reinforce market doubts that Opect – of which Iran is a member – will take any firm action to curb oversupply.
Last month, talks in Doha involving Opec members and other major producers such as Russia failed to reach a deal to cap production.
