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Oil price above US$50 sparks mixed reactions

Published: 11:08 26 May 2016 EDT

Picture of oil worker

Barely had the crude price risen above US$50 and commentators were warning about the impact on petrol prices.

The AA said that the 'party is over; for motorists as concerns over escalating violence in Nigeria, lower than expected US stockpiles and the wild fires in Canada sent Brent and WTI crude higher.

It is the highest crude price for seven months, but, according to Commerzbank, oil at this level makes shale oil production lucrative again in many places, which could dampen the fall in production in the coming months.

“What is more, oil production is gradually resuming in those regions of Canada plagued by wildfires, which means the supply situation is likely to ease again in the coming weeks.”

At its low in January, crude fell to under US$30 per barrel, when prices at the pumps fell to £1 per litre.

They have since risen to 110p on average said the AA, which does not expect prices to fall back to 100p again.

Research house Capital Economics said that the recovery in oil prices was, on balance, good news for the global economy and for equity prices.

“Prices in the $50 to $60 range would be high enough to ease some of the pressure on producers, while still low enough to boost spending on other goods and services.”

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