Oil prices hit their highest of 2019 on Tuesday, with Brent crude approaching $70 a barrel, on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut.
Brent futures reached a session peak at $69.50 a barrel, the highest since Nov. 13. The global benchmark was 13 cents, or 0.2 percent, higher at $69.14, by 10:58 a.m. EDT (1458 GMT).
U.S. West Texas Intermediate (WTI) crude gained 50 cents, or 0.8 percent, at $62.09 a barrel. The contract earlier hit $62.38, the highest since Nov. 8
“Today’s multi-month highs in WTI and Brent are keeping this bull move alive as prices are beginning to advance more than we had expected,” said Jim Ritterbusch, president of Ritterbusch and Associates. “But despite attainment of our $62 upside WTI target, we will caution against accepting profits prematurely given a recent burst of bullish momentum.”
The United States is considering more sanctions against Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries, an official said. While Washington has granted waivers to eight Iranian oil buyers, the number of waivers could be reduced in the future.
Meanwhile, a key crude terminal in Venezuela, also under U.S. sanctions, has halted operations again due to power supply problems.
Further supply losses from Iran and Venezuela could widen an OPEC-led production cut that took effect in January, designed to prevent a price-sapping rise in inventories.
OPEC supply hit a four-year low in March, a Reuters survey found, because top exporter Saudi Arabia cut more than it had agreed to and due to the involuntary declines.
But Russia, the biggest non-OPEC producer in the so-called OPEC+ group, has yet to reach its production-cutting target. Russian oil output declined to 11.3 million barrels per day (bpd) last month, energy ministry data showed.
While the country’s output was down by around 112,000 bpd from the October 2018 level, Russia has pledged to cut its oil output by 228,000 bpd from that level.
For direction on U.S. supply, investors will look to weekly domestic crude inventory data. Analysts in a Reuters poll estimated that stocks fell 1.2 million barrels in the week to March 29.
Data from industry group the American Petroleum Institute is due out at 4:30 p.m. EDT (2030 GMT), while U.S. government data is scheduled to be released on Wednesday.
Oil’s pattern on the price charts could lead to further gains. Brent is trading just below the 200-day moving average and a move above this mark would provide additional technical support, said Olivier Jakob, analyst at Petromatrix.
After investors have worried for months about disappointing global economic data that could mean weaker demand for crude, healthier data from the United States and China this week bolstered prices.
Figures showing a rebound in U.S. factory activity in March and a return to growth in Chinese manufacturing eased concerns about a global economic slowdown.
SOURCE: Reuters