Anticipations of more US sanctions against Iran, further Venezuelan supply disruptions and improved expectations about global oil demand have sustained oil price at its 2019 high of above $69 and could exacerbate OPEC-led supply cut.
“China’s Purchasing Managers’ Index (PMI) number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand,” Stephen Innes, head of trading and market strategy at SPI Asset Management, said.
Brent futures reached a session peak at $69.52 a barrel, the highest since November 13. The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel.
US West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since November 7.
“The supply cuts have been there for a while but Venezuela is not improving,” said Olivier Jakob, analyst at Petromatrix. “That is taking a lot of oil away from the market.”
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.
Supply from the OPEC nations 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.
Three of the eight countries to which Washington granted waivers to import Iranian oil have now cut their shipments from Iran to zero, a US special representative said on Tuesday.
Meanwhile, a crude terminal in Venezuela, also under U.S. sanctions, halted operations again due to power problems.
“The latest driver appears to be the idea that tightened supplies are going to create a stronger fundamental picture,” said Gene McGillian, director of market research at Tradition Energy. “The market keeps pushing higher.”
However, state-owned Saudi Aramco may cut the official selling price (OSP) for its flagship Arab Light crude by 5 cents a barrel for May, according to the median of responses of five refining sources. The sources gave a range of an increase of 5 cents to a cut of 25 cents.
Top oil exporter Saudi Arabia is expected to keep prices of various grades of crude it sells to Asia little changed in May from the previous month, trade sources said on Tuesday.
This week’s reports on US supplies are expected to show crude inventories fell, a sign that the OPEC curbs are having the impact producers intended.
Six analysts polled by Reuters estimated, on average, that crude stocks fell by 1.2 million barrels in the week to March 29.
