Oil faces struggle to keep above USD 50, as OPEC looms

World oil prices may struggle to sustain a push beyond USD 50 a barrel after hitting the key level for the first time this year, analysts warned today.
Crude futures topped USD 50 a barrel yesterday, as production disruptions in Canada contribute to a drop in US crude inventories. Prices have won support also from unrest in Nigeria, Africa's biggest crude producer.
Prices slipped back today however, as analysts warned that the week's move above USD 50 could trigger some North American producers of crude extracted from shale rock to lift output.
Slumping prices, resulting in crude trading at under USD 30 a barrel in February from above USD 100 two years ago, made it unprofitable for some shale companies to compete with traditional producers like OPEC and Russia.

Futures had plunged over a 21-month period owing largely to a global supply glut, fed by rising production of shale oil.
Oil at USD 50 is meanwhile viewed as a level at which it makes economic sense for certain suppliers to start pumping again, CMC Markets trader Alex Wijaya told AFP.

"Crude oil prices have failed to hold above the USD 50 level due to concerns that higher prices could unlock more supply," he said today.
Traders are now eyeing next week's meeting of the Organization of Petroleum Exporting Countries (OPEC) in Vienna to discuss world production levels.
"There is probably a sliver of hope that OPEC producers will hammer out an agreement to support oil prices, be it to freeze production or otherwise," said IG Asia analyst Bernard Aw.

OPEC member Iran, which returned to world markets in January after the lifting of Western sanctions linked to its nuclear programme, has so far refused to curb production.
Tehran's stance appeared to reinforce market doubts that OPEC would take any firm action to curb oversupplies.
In addition, "OPEC will no doubt use the recent supply disruptions in Canada, the falling output in the US and the firmer oil prices as reasons not to cut production", said Fawad Razaqzada, market analyst at trading group City Index.
"In the likely event the OPEC maintains status quo, oil prices may fall, at least initially anyway."

Razaqzada said the biggest risk to the crude market would be if OPEC did cut production.
"This potential scenario would almost certainly lead to a sharp rally in oil prices," he added.
Brent North Sea crude, the world's benchmark oil contract, reached USD 50.51 a barrel yesterday -- the highest level for almost seven months.
US benchmark, West Texas Intermediate, meanwhile reached USD 50.21 a barrel.