Oil rises to four-month high as OPEC output retreats again

OPEC-led production cut lends support to prices

OPEC-led production cut lends support to prices

US energy companies last week reduced the number of oil rigs operating to the lowest level in almost a year, cutting the most rigs during one quarter in three years, energy services firm Baker Hughes said.

U.S. West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.72, its highest level since November 7.

Oil hit a 2019 high above $62 a barrel on Tuesday on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut, and as the market became less anxious that demand may slow. The official also suggested that the USA may not extend waivers from sanctions on Iranian oil exports to a group of eight importers that expire next month.

The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel. The more active June contract was up $0.89 at $67.99 a barrel.

On the supply front, booming American production has steadied, with the US government reporting on Friday that domestic output in the world's top crude producer edged lower in January to 11.9 million barrels per day.

For the two futures contracts, January-March 2019 is the best-performing quarter since the second quarter of 2009, when both gained about 40%.

According to a senior Trump administration official, the USA government is considering additional sanctions against Iran that would target areas of its economy that have not been hit before.

"China's PMI number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand", said Stephen Innes, head of trading and market strategy at SPI Asset Management.

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There's an increasing sense that Saudi Arabia isn't messing around this time and wants oil near $75.

OPEC and its allies are scheduled to meet in June to set policy, but some cracks in the union are emerging.

OPEC's de facto leader Saudi Arabia favours cuts for the full year while Russian Federation, which joined the agreement reluctantly, is seen as less keen to restrict supply beyond September.

Oil prices rose on Monday, adding to gains in the first quarter when the major benchmarks posted their biggest increases in almost a decade, as concerns about supplies outweigh fears of a slowing global economy.

Still, Barclays bank forecast oil prices "are likely to move still higher in Q2 and average US$73 per barrel (US$65 WTI), and US$70 for the year".

US production has also steadied, with the USA government reporting on Friday that domestic output in the world's top crude producer edged lower in January to 11.9 million bpd.

The 14 OPEC members pumped 295,000 barrels less oil a day in March than in February, restricting total output to 30.385 million barrels, according to a Bloomberg survey of officials, analysts and ship-tracking data.

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