Brent oil futures climb above $50 a barrel for the first time in nearly seven months, boosted by U.S. government figures showing a sharper-than-expected drawdown in crude stocks. As Sonia Legg reports, it helped boost energy-related shares in Europe and Asia.
Low prices have been wreaking havoc among oil firms and producers for most of the year - new job cuts at Royal Dutch Shell a case in point. 2,200 extra layoffs were announced on Wednesday - on top of the 10,000 plus already in the pipeline. But prices have been creeping up in recent weeks - and Brent crude has just topped $50 a barrel for the first time in nearly seven months. A sharper than expected fall in US crude stocks sparked the rise. (SOUNDBITE) (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "Saudi Arabia has been the kingpin in terms of trying to destroy the oil price, in order to keep the United States self-sufficiency back for a little bit. But then we have had problems with Nigeria and then we have had problems in Canada and also the demand has picked up which has slightly surprised people." Energy stocks rose as a result. But prices may not go much higher. (SOUNDBITE) (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "I would expect that to come back perhaps when we have got these political idiosyncrasies out of the way for the time being to maybe 40 dollars a barrel." Certainly few expect to see prices return to their 2015 peak of $100 a barrel. But they won't be $30 either. (SOUNDBITE) (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "When oil was down at 27-35 dollars a barrel I don't think any economy in the world actually capitalized on that situation to the full for all their consumers and everybody else. I think it is a great pity because it may be an opportunity lost and of course as we know, now when oil prices start to go up and the end user has it, it effects all kinds of industry, business, commerce as well as the consumer." Rising prices will help the ECB though. They've helped lift a gauge of long-term inflation expectation above 1.5 percent - that's just half a percent below the central bank's target.