Crude oil price climbed more than one per cent with United States crude hitting a 2019 high yesterday after tight supply and positive signs for the global economy drove both benchmarks’ largest first-quarter gains in nearly a decade.
The price of the US West Texas Intermediate (WTI) was up 85 cents, or 1.4 per cent, at $60.99, after reaching their highest in more than four months at $61.15.
Reuters reported that WTI gained 32 per cent in the first quarter.
The global benchmark, Brent crude for June delivery was up 93 cents, or 1.4 per cent, at $68.51 after rising by more than a dollar in earlier trading and gained 27 per cent in the January-March period.
Crude oil production cuts from the Organisation of the Petroleum Exporting Countries (OPEC) helped push supply to a four-year low in March, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group’s supply-cutting pact while Venezuelan output fell further due to United States sanctions and power outages.
US construction spending reportedly increased for a third straight month in February, offering some good news on the economy following a string of weak reports.
The US data followed positive Chinese factory gauges and signs of progress in Sino-US trade talks have boosted sentiment, helping to buoy regional stock markets.
The United States and China said they made progress in trade talks that concluded on Friday in Beijing, with Washington saying the negotiations were “candid and constructive” as the world’s two largest economies try to resolve their trade war.
China’s State Council said on Sunday that the country would continue to suspend additional tariffs on United States vehicles and auto parts after April 1, in a goodwill gesture following a US decision to delay tariff hikes on Chinese imports.
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.
Also, US energy companies last week reduced the number of oil rigs operating to the lowest level in nearly a year, cutting the most rigs during one quarter in three years, energy services firm, Baker Hughes, said.
Meanwhile, oil prices are being propped up by US sanctions on Iran and Venezuela along with voluntary supply cuts by the OPEC and other major producers.
Output from OPEC countries fell by 280,000 barrels per day (bpd) from February to 30.4 million bpd, its lowest monthly rate since 2015.
Washington has instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, and has urged Malaysia and Singapore to be vigilant for illicit Iranian crude in its waterways.