Oil close to one-month peak amid worry about supply

London — Brent oil prices held near one-month highs on Thursday supported by China’s efforts to boost its economy, a drop in new coronavirus cases at the epicentre of the outbreak and supply concerns in Venezuela and Libya.

Brent crude futures were up 7c at $59.19 a barrel by 9.39am GMT, after climbing to as high as $59.71 earlier in the day.

West Texas Intermediate (WTI) crude futures climbed 17c to $53.46 a barrel.

China’s move to cut its benchmark lending rate on Thursday also helped ease the worry about slowing demand in the world’s second-biggest oil consumer and largest crude oil importer.

China reported 349 new confirmed cases in Hubei province on Wednesday, the lowest in more than three weeks, while the death toll rose by 108, down from 132 the previous day.

“The market found support in still-growing optimism over a soon-to-be-felt increase in Chinese economic activity and the prospect of Venezuelan export constraints increasing,” JBC Energy said.

The US this week sanctioned a trading unit of Russian oil giant Rosneft for its ties with Venezuela’s state-run PDVSA, a move that could choke the Opec member’s crude exports even further.

At the same time, conflict in Libya that has led to a blockade of its ports and oilfields shows no signs of a resolution.

The head of Libya’s internationally recognised government Fayez al-Serraj dashed the hope of reviving peace negotiations on Wednesday after the Libyan National Army of Khalifa Haftar shelled the port in the capital Tripoli, held by al-Serraj’s government.

The more than month long shutdowns in Libya have slashed the Opec member’s crude production by more than 1-million barrels a day.

Brent crude may extend its gains to $60.22 a barrel, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.

Meanwhile, American Petroleum Institute (API) data showed a bigger-than-expected build up in crude oil inventories helped cap price gains.

US crude stocks rose by 4.16-million barrels in the week to February 14, compared with analyst expectations for a build of 2.5-million barrels, according to data from the industry group on Wednesday.

“Although crude oil inventories rose by more than expected, the draws of 2.7-million barrels in [petrol] stocks and 2.6-million barrels in distillate inventories keep the futures markets steady this morning,” brokerage PVM said.

Official Energy Information Administration (EIA) stock data is expected to come later in the day.

Reuters