Brent flirts with $70 as Opec-led cuts lend support

London — Oil prices rose for a fourth day on Wednesday, pushing Brent towards a nearly five-month high of $70 a barrel as support from oil cartel Opec-led supply cuts and US sanctions overshadowed a report showing an unexpected rise in US inventories.

Brent futures gained 38c, or 0.55%, to $69.75 by 9am GMT. They earlier reached $69.96 — the highest since November 12, when they last traded above $70. US West Texas Intermediate (WTI) crude rose 20c or 0.32% to $62.78, having hit $62.99, the highest since November 7.

“The psychologically important $70 a barrel threshold has proved a tough nut to crack for the Brent benchmark over the past few weeks,” PVM oil broker Stephen Brennock said. “Underpinning this latest bout of upward pricing pressures is the positive afterglow from surveys pointing to another sizeable fall last month in Opec output. Reduced supplies from the producer group will go a long way to cementing the tighter fundamental backdrop.”

Oil prices have been supported for much of 2019 by efforts by Opec and allies such as Russia, who have pledged to withhold about 1.2-million barrels per day (bpd) of supply this year. Supply from Opec countries hit a four-year low in March, a Reuters survey found this week.

Oil production from Russia fell to 11.3-million bpd last month, but missed the country’s target under the supply deal.

“We assume that Opec crude oil production will average 30.1-million bpd in 2019 … down from 31.9-million bpd in 2018,” BNP Paribas said in a note, reducing an earlier forecast for this year by 200,000 bpd.

Three of eight countries granted waivers by Washington to import oil from Iran have cut such purchases to zero, a US official said on Tuesday, adding that improved oil market conditions would help reduce Iranian crude exports further.

Despite also being under US sanctions, Venezuela’s state-run energy company, PDVSA kept oil exports near 1-million bpd in March, PDVSA documents and Refinitiv Eikon data showed.

US crude stocks rose unexpectedly last week, while petrol and distillate inventories declined, the American Petroleum Institute (API) said late on Tuesday. Official numbers from the US department of Energy are due later on Wednesday.

Reuters