After 11-month peak, oil prices take a breather

After surging for three straight days to an 11-month high, oil prices pulled back Thursday as investors booked profits.

"Although there is potential for a small decline to develop into a more significant drop, so far this looks like a modest technical correction following three days of gains rather than a major reversal," said Tim Evans of Citi Futures. 

The US benchmark contract, West Texas Intermediate for July delivery, fell 67 cents to $50.56 a barrel, a day after closing at the highest level since July 2015.

In London, Brent North Sea for August delivery, the European benchmark, dropped 56 cents to $51.95 a barrel.

"A little profit taking here, but there's still a lot of strength in the market," said Carl Larry of Frost & Sullivan.

Larry predicted that prices could reach $55 next week. "Demand is strong," he said, while supplies are starting to look a bit weaker. "We're beginning to see a little more interest to the upside."

Oil prices have almost doubled since hitting their lowest level since 2003 in February, helped by declining US output and production cuts in Nigeria, because of rebel unrest, and in Canada, as wildfires ravaged the oil-producing Alberta region.

"The existing momentum, the market sentiment, the absence of any bearish news and the still sizeable supply outages suggest that the price rise will continue," Commerzbank analysts said in a research note.

They noted that investors shrugged off a 10,000 barrel per day rise last week in US crude oil production, the first increase in 13 weeks.