Investing.com -- Crude extended its recent hot streak as U.S. futures closed above $50 a barrel for the first time in nearly a year, ahead of the American Petroleum Institute's latest inventory report on Tuesday evening.
On the New York Mercantile Exchange, WTI crude for July delivery traded in a tight range between $49.45 and $50.41 a barrel before closing at $50.40, up 0.69 or 1.37% on the session. The front month contract for U.S. crude settled at its highest closing total of the year, fractionally above levels one session earlier. On the Intercontinental Exchange (ICE), brent crude also closed near session-highs at $51.46, up 0.90 or 1.78% on the day. North Sea brent futures eclipsed the $51 handle for the first time since early-October.
Oil prices remained near multi-month highs on Tuesday, as a longstanding conflict in Nigeria continued to slow production helping assuage concerns related to global oversupply. It came amid growing pessimism from Shell (LON:RDSa) that a damaged export pipeline in Southern Nigeria can be salvaged. Last week, a facility at Shell's Nigerian oil subsidiary was severely damaged from a series of attacks perpetrated by a rogue military group known as the Niger Delta Avengers, which have purportedly carried out the attacks to further their environmental agenda against a host of energy companies in the area.
"We cannot operate or repair if our people are threatened," Shell CFO Simon Henry told Bloomberg at the company's annual capital markets day on Tuesday.
On Monday evening, Nigeria oil minister Emmanuel Ibe Kachikwu announced that president Muhammadu Buhari's national security team had initiated discussions with the militant group in an effort to slow the rate of attacks. The Avengers, which have reportedly claimed responsibility for more than a dozen attacks in the Nigerian swamps over the last week, pledged on Monday to eliminate all oil production nationwide. The acts of sabotage have forced approximately 600,000 barrels per day offline, pushing Nigerian output to its lowest levels in more than two decades. Separately, Kachikwu said that daily production in the country has fallen to a range in between 1.5 and 1.6 million barrels per day, down from 2.2 million bpd at the start of the year.
At the close of trading on Tuesday, the American Petroleum Institute is expected to report a draw of 3.5 million barrels in U.S. crude inventories for the week ending on June 3. Although U.S. crude stockpiles have fallen in each of the last two weeks, they still remain close to full storage capacity.
Any considerable inventory draws are viewed as bullish for crude prices, as global demand outpaces supply by approximately 1.4 million bpd.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.15% to an intraday low of 93.75. The index has crashed by more than 5% since early-December.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.