The waning American crude oil reserves, the wild fires in Canada and the dip in the African fuel output have together caused the oil price to soar to $50 a barrel for the first time this year. It was only a few days back that Goldman Sachs, an international investment firm, predicted that crude oil would price at $50 in the second half of 2016.
The beginning of 2016 saw the price dip to $28 per barrel, an all time low in the last 13 years. Although some analysts and financial institutions did foretell a drop to $20, the crude oil price has climbed up in the course of the past one month. The rate recorded on Thursday was $50.12 and may be considered noteworthy as it was the first time since November last, that crude oil has hit the $50 mark. After having fallen to its lowest this year, the rise over the past five months has been 80%.
The events in the US and in Canada are believed to have had a bearing on the surge in the crude oil price. The US Energy Information Administration has declared a drawdown of 4.2 million barrels in the supply, the causes of which have been traced to the fall in the number of wells yielding Shale Oil and the wild fires in Canada. Speaking of countries who supply crude oil to the US, Canada ranks among the top few and the wild fires have virtually brought the oil production to a standstill.
As for Nigeria, the chief producer of crude oil in Africa, rebels have attacked fuel pipelines causing the oil supply to suffer considerably. Meanwhile, as against the increased demand for crude oil from Russia, China and India, the supply remains inadequate, pushing the price upwards.
In consideration of this rise, Goldman Sachs, a financial firm and BP, a leading oil and gas company have both predicted that the price rise has come to stay. Goldman Sachs had forecast the $50 hit for the second half of 2016 and a climb to $60 per barrel for 2017. The predictions of BP coincide with Goldman Sachs for 2016 at $50 but foretell a $55 rate per barrel for 2017.
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