The price of crude oil rose to almost $70 a barrel, a level last breached in November, as global crude supplies tightened, while hopes for an end to the US-China trade impasse lifted financial markets.
Brent crude’s rapid recovery this year — with the biggest quarterly gain in almost a decade — is a victory for the production cuts made by Opec and its allies.
Yet by preventing the re-emergence of a supply glut, the group has stoked the ire of US President Donald Trump and heightened the risk of legal moves against it.
Rising prices may also influence White House decision-making on sanctions against cartel members Iran and Venezuela. Oil added as much as 0.9% in London, a fourth daily increase. Crude rose along with equities, which gained as US and Chinese officials prepared to resume negotiations in Washington to resolve differences over trade.
Though US industry data indicated that the US’s crude stockpiles increased last week, a fourth month of lower production from Opec is tightening global supplies. “The $70-a-barrel price level is within striking distance,” said Norbert Ruecker, head of macro and commodity research at Julius Baer in Zurich. “The market seems eager to recoup this level.”
Brent for June settlement rose 24c to $69.61 a barrel on the ICE Futures Europe exchange, having earlier climbed to $69.96.
Chinese vice premier Liu He will resume negotiations with his US counterparts in Washington as both governments push for an agreement to end their protracted trade dispute.
Officials from the two countries have resolved most of their issues but are still haggling over enforcement mechanisms, says the Financial Times.
On the supply side, Russian output has dropped to 190,000 barrels a day below October levels, the country’s energy minister said in a statement — falling short of the 228,000-barrel-a-day cut pledged under the so-called Opec-plus deal. That was offset by Saudi Arabia’s reduction to a four-year low of 9.82m barrels a day.
Opec’s efforts have allayed concerns over an American Petroleum Institute report that was said to show a 3m-barrel weekly increase in US crude stocks. “There is an assumption that the pull-through from the products will more than overcome the crude surplus,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific in Sydney.
Meanwhile, Saudi Aramco’s bond prospectus revealed its giant Ghawar oil field can pump 3.8m barrels a day — well below the more than 5m that had become the conventional wisdom in the market.