Oil hits two-month high on tighter US market

SINGAPORE: Oil prices hit a twomonth high on Monday, lifted by a tightening US crude market and the threat of sanctions against Opecmember Venezuela.

US West Texas Intermediate (WTI) futures briefly jumped over $50 per barrel on Monday and were at $49.97 per barrel at 0654 GMT, still up 25 cents, or 0.5 per cent from their last close.

That means that virtually the entire WTI curve has moved over $50 per barrel.

Brent crude futures were at $52.85 per barrel, up 33 cents or 0.6 per cent. Prices hit $52.90 per barrel earlier in the day, their highest since May 25.

The price rises put both crude benchmarks on track for a sixth consecutive session of gains.

Prices have risen around 10 per cent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, when the group discussed potential measures further tighten oil markets.

The United States is considering imposing sanctions on Venezuela’s vital oil sector in response to Sunday’s election of a constitutional super-body that Washington has denounced as a “sham” vote.

But traders said the biggest price supporter was currently a tightening US oil market.

“Strong increases in the price of oil US crude inventories have fallen by 10 per cent from their March peaks to 483.4 million barrels.

In production, US output dipped by 0.2 per cent to 9.41 million barrels per day (bpd) in the week to July 21, after rising by more than 10 per cent since mid-2016.

Drilling for new US production is also slowing, with just 10 rigs added in July, the fewest since May 2016. The tighter market was also visible in the price curve, which shows backwardation in the front end. to