Crude oil prices rose to a five-month high Monday, on expectations for tighter global supply due to fighting in Libya, Opec+-led cuts and U.S. sanctions against Iran and Venezuela.
International benchmark Brent futures were up 69 cents, or 1%, to $71.03 per barrel. U.S. West Texas Intermediate crude settled up 2.1%, at $64.40/Bbl, and hit its highest level since Nov. 1, Kallanish Energy reports.
Prices extended gains after crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell by roughly 419,000 barrels last week, traders told Reuters, citing data from market intelligence firm Genscape.
Investors already were focused on supply during the session as fighting in oil-rich Libya threatened to disrupt exports. Forces in the eastern portion of the country were advancing on the country’s capital.
To prop up prices, Opec and a number of allies, led by Russia and collectively known as Opec+, pledged to withhold roughly 1.2 million barrels per day (Mmbpd) of supply beginning this past Jan. 1. The group, led by Saudi Arabia, has exceeded those expectations so far this year.
Strong U.S. jobs data on Friday also still supported markets Monday.
Despite the factors boosting prices, there are still factors that could bring oil prices down later this year.
Russia is a reluctant participant in its agreement with OPEC, and Kirill Dmitriev, the head of Russia’s direct investment fund, said Opec+ should raise output beginning in June.
Saudi energy minister Khalid al-Falih Monday said it was premature to say whether a consensus existed among Opec and its allies to extend cuts, but a meeting next month would be key.
Russian oil output reached a national record high of 11.16 Mmbpd in 2018. In the U.S., crude production reached a global record 12.2 Mmbpd in late March.
There also remain concerns about the health of the global economy, especially should China and the U.S. fail to resolve their trade dispute soon.
This post appeared first on Kallanish Energy News.