Oil price surge justified by production outages?

Oil prices rose yesterday despite the strong USD, Brent climbing above $50 per barrel again for the first time since mid-October. In the current rather negative environment, every small news is likely to justify the surge in oil prices. 

Oil prices slid in thin trading on Wednesday as investors took profit from the previous session's hike, although there were supply disruptions in Brazil and Libya, which helped to cap the losses. 

Brent futures for December delivery fell 34 cents to $50.20 at barrel in Wednesday's early trades, while U.S. crude for December delivery slipped 20 cents to $47.70 a barrel. 

Yesterday, the increase was due to an unscheduled production outage, workers at the state owned oil company Petrobas in Brazil were on strike since start of the week. According to the union, up to 500,000 barrels less oil per day are being produced nationwide as a result, though the company itself estimates a lower figure.

Furthermore, the Zueitina oil export terminal in Libya has had to be shut again because of the tense security situation, which is hampering oil exports from this North African OPEC country, which in any case is achieving only limited production. 

However, even if the unscheduled outages were to increase somewhat in the short term, according to EIA estimates, they already totalled 3.7 million barrels in September, which was their highest level since 2010 - supply remains more than ample on the oil market. 

"This is likely to be confirmed once again by the US crude oil inventory report that is due to be published by the US Department of Energy this afternoon. The American Petroleum Institute had already reported a 2.8 million barrel increase in US crude oil stocks yesterday. The Brent price is likely to find it hard to defend the $50 per barrel mark", says Commerzbank.