FSMNews

Oil futures retreated during Asian trade on Friday after breaking resistance at the $50 mark as market players worried that higher oil prices could reactivate shuttered crude production, thereby adding to the global oil glut.

In addition, a stronger US dollar weighed on oil markets. The greenback was supported by bullish US economic data amid increasing expectations of an interest rate hike in the near term.

Brent plunged 0.7 percent or 34 cents, to hit $49.25 by 0652 GMT, slipping further from the prior sessions $50.51 high—its highest since the early part of November.

US crude tumbled by 0.6 percent or 31 cents, to reach $49.17 per barrel after touching $50.21 on Thursday—its highest since the early part of October.

FSMNews

Crude oil pushed through the $50 mark for the first time in about 7 months on Thursday after supply disruptions from Canadian wildfires and attacks in Libya and West Africa contributed to the reduction of daily output by 4 million oil barrels. However, the oil market eased to close down on the day.

According to oil risk manager at Mitsubishi Corporation, "Shale is the new shock absorber to the market."

"There is a wide range of production costs. Shales total production costs are around $48-$50 a barrel - there will be producers who make money at $50," he further added.

Some technical analysts pointed out that the prices of oil, which have edged higher by almost 90 percent from 12-year lows hit earlier this 2016, face pricing barriers to moving higher in the following 3 to 5 weeks. Furthermore, Brent is currently facing a huge headwind at around the $52 level.

National Australia Bank senior analyst Yvanne Lai stated, "In the next few months oil prices could stay in the high $40-$50 mark. We are entering the U.S. driving period so seasonal demand might provide underlying support to oil prices," said Yvanne Lai, senior analyst at National Australia Bank.

In addition, Nunan stated that the meeting of the Organization of the Petroleum Exporting Countries scheduled on June 2 may provide further indications regarding the direction of the oil markets.