Brent, WTI Prices Spike
Oil hit a two-month high above $63 a barrel on Monday as OPEC-led supply cuts and US sanctions against Venezuela’s petroleum industry offset forecasts of weaker demand and an economic slowdown.
The Organization of the Petroleum Exporting Countries and its allies began a new round of supply cuts in January, CNBC reported.
Brent crude, the global benchmark, hit $63.40 a barrel, the highest since Dec. 7, and was up 49 cents at $63.24.
US crude hit a 2019 high of $55.68 and was later up 9 cents at $55.35.
“You have the sanctions on Venezuela, on top of the reduced supply from Saudi Arabia,” said Olivier Jakob, oil analyst at Petromatrix. “There’s no sign of overhang in the crude oil markets.”
OPEC supply fell in January by the largest amount in two years, a Reuters survey last week found. That offset limited compliance so far by non-OPEC Russia.
The US sanctions on Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said after examining details announced by the government.
Underlining the lack of excess supply, Jakob cited a rapidly clearing West African crude market and the structure of Brent crude futures, in which the first-month contract is trading near the price of the second month.
While OPEC and its allies are cutting output, the United States is expanding supply. Nonetheless, figures on Friday showed a drop in the number of US oil rigs to their lowest in eight months, lending prices some support.
source: Financial Tribune
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