Oil rises above $50 for first time in 2 months…then retreats

U.S. crude oil on Monday briefly broke through the key psychological level of $50 a barrel for the first time in two months.

U.S. West Texas Intermediate crude touched a session high of $50.06 in overnight trading, its highest intraday level since May 30. The fresh 9-week high came after WTI posted its best weekly performance of the year, surging 8.6 percent last week.

The September contract slipped back to trade down 38 cents at $49.33 by mid-morning on Monday.

U.S. WTI crude year to date

Prices rose above $50 earlier in the session against the backdrop of U.S. threats to slap sanctions on Venezuela’s energy sector after embattled President Nicolas Maduro proceeded with a vote to replace the nation’s legislative body. The sanctions are seen as heaping pressure on Venezuelan state energy company PDVSA and potentially reducing the country’s oil output even further than it has already fallen throughout a prolonged economic crisis.

OPEC also announced over the weekend that some members of the cartel, including top oil exporters Saudi Arabia and Russia, will meet next week to discuss ways to improve compliance with a deal to limit output among roughly two dozen crude-producing nations.

U.S. shale producers have begun reducing capital spending plans, a positive signal for observers concerned about surging American output weighing on oil prices.

Some analysts believe oil prices will struggle to rise much above $50 a barrel though, citing a number of technical resistance levels and developments in the physical market.

Still, hedge funds and money managers have begun raising their bets that oil prices will rise in recent weeks. The volume of bullish bets on U.S. crude mostly fell from the end of February through the end of June.