Oil rises to 2019 highs as demand outlook improves
NEW YORK: Oil climbed about 2 per cent to new 2019 highs on Monday, with Brent crude touching US$ 69 a barrel, after positive signs for the global economy and tighter supplies drove both benchmarks’ largest first- quarter gains in nearly a decade.
Brent crude for June delivery was up US$ 1.49, or 2.2 per cent, at US$ 69.07 a barrel by 1.28pm EDT (1728 GMT) after rising to US$ 69.12, its highest since November.
The global benchmark rose 27 per cent in the January- March period.
US West Texas Intermediate ( WTI) futures were up US$ 1.45, or 2.4 per cent, at US$ 61.59 per barrel, after reaching their highest in nearly five months at US$ 61.64.
WTI gained 32 per cent in the first quarter.
“It was the 1-2 punch in terms of positive manufacturing PMI data from China and the US, two big economies, and that has emboldened the bulls in the market,” said John Kilduff, a partner at Again Capital Management in New York.
“The big headwind was the string of weak economic data and that has been relieved today, so the bullish narrative is not being held back.”
US stocks rallied after upbeat manufacturing numbers from the United States and China eased worries about slowing global growth.
China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March.
US manufacturing numbers also came in better-than- expected in March, helping investors overlook soft retail sales data for February.
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 US vehicles and auto parts after April 1, in a goodwill gesture following a US decision to delay tariff hikes on Chinese imports.
“This bull market in energy that has entered its fourth month in duration appears capable of continuing,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Production cuts from the Organisation of the Petroleum Exporting Countries helped push the group’s supply to a four-year low in March, a Reuters survey found, as top exporter Saudi Arabia overdelivered on the group’s supplycutting pact while Venezuelan output fell further due to US sanctions and power outages.
Analysts have turned cautiously optimistic on the oil market, a monthly Reuters poll showed on Friday, lifting their forecast for the average Brent price in 2019 for the first time in five months to US$ 67.12.
Hedge funds and money managers raised bullish wagers on US crude to the highest in more than five months, the US Commodity Futures Trading Commission (CFTC) said.
Brent crude speculators also raised net long positions by 13,429 contracts to 322,035 in the week to March 26, data from the Intercontinental Exchange showed. That was the highest level since late October.
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.
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, according to a Reuters survey, its lowest monthly rate since 2015.
Washington has instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, sources told Reuters, and has urged Malaysia and Singapore to be vigilant for illicit Iranian crude in its waterways. — Reuters