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Oil hits 2016 high amidst doubts of price stability

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Oil hits 2016 high amidst doubts of price stability

Declining oil output from Nigeria, France and a shortfall in US inventories combined on Monday to shore up oil prices to their highest in eight month.

Brent crude rose marginally by 67 cents to hit $51.22 a barrel having hit their highest since October.

In Nigeria, the persistent attacks by Niger Delta Avengers (NDA) on oil pipelines have shut in supplies by about 50 percent. To stave off further damage to the economy, the federal government has asked for a 2-week cease-fire to create room for dialogue with the militants.

In France, preliminary work got under way on Monday to restart three of Total’s French oil refineries, stopped as part of nationwide strikes.

U.S. commercial crude oil inventories reportedly fell by 3.5 million barrels last week, marking a third straight weekly drop, a preliminary Reuters poll showed. Oil, along with the rest of the commodities complex, has also been supported by a weaker dollar.

OPEC failed to agree on a clear oil output strategy last week, but traders said Saudi Arabia’s promise not to flood the market has provided support to oil.

There are market fears though that the upswing may not last. Analysts have noted that the market may be braced for signs of recovering U.S. oil production as that country revives shale drilling activity and stabilise declining U.S. oil production.

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