The price of oil has settled above US$50 a barrel for the first time in nearly a year.
The July benchmark contract for West Texas Intermediate crude closed Tuesday at US$50.36, an increase of 67 cents from the previous day.
That’s the first time oil has settled above the US$50 mark since last July.
“$50 is a big psychological hurdle for crude oil, and it’s one that it’s been bumping up against for a couple of weeks now,” said Colin Cieszynski, chief market strategist at CMC Markets Canada. To see it break through is very encouraging and suggests that there is enough support to keep carrying crude oil higher.”
In February, oil settled as low as US$26.21 a barrel.
“It’s a pretty spectacular move in a fairly relatively short period of time,” Cieszynski said.
Canada’s economy has been hit hard by a rapid and deep decline in global oil prices that began in late 2014.
Ambarish Chandra, a professor at the University of Toronto, says there are always “winners and losers depending on what the oil price is.”
“When oil prices are higher it helps governments in particular but also helps consumers, a stronger loonie equals better purchasing power,” he told Global News in April. “When oil prices are weaker the usual argument is that exporters, especially manufacturers, can do better. What I think is a problem increasingly in the last few years is just the volatility the uncertainty around what the price of oil is going to be.”
Crude prices have gradually risen in recent weeks due to several factors, including the wildfires in Fort McMurray, Alta., which at one point may have taken out as much as half of Canada’s total oilsands production, according to some estimates. Those operations have gradually started to come back online.
Militant attacks on pipeline infrastructure in Nigeria have also caused supply disruptions in the oil-producing country.