Oil prices firm on tightened supply, trade optimism

London — Oil prices edged up on Monday toward a 2019 high achieved last week as sanctions and political uncertainty tightened supply in several producer countries and US-China talks appeared headed toward success.

But record US exports and continued anxiety over poor economic data worldwide this year may curb gains.

International Brent crude oil futures were at $67.28 a barrel at 9.50am GMT, up 16c, or 0.24%, from their last close. On Friday, they briefly touched their highest levels since November 16 at $67.73 a barrel.

US West Texas Intermediate (WTI) crude futures were at $57.39 a barrel, up 13c, or 0.23%, from their last settlement. WTI futures marked their highest since November 16 at $57.81 a barrel.

“Risk appetite across global markets should improve as President Trump extends the deadline of trade talks with China,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.

“Supply risk is ever present with Venezuelan tensions brewing a notch higher … the National Oil Corporation in Libya refusing to start production at the El Sharara field,” he added, while also citing uncertainty over elections in top African oil exporter Nigeria.

US sanctions on Iranian and Venezuelan crude plus involuntary curbs in Nigeria and Libya are lending support to efforts to balance the market and support prices, efforts led by member of oil cartel Opec and non-Opec producers such as Russia.

Further brightening the global economic picture, US President Donald Trump on Sunday signalled a potentially bruising trade war with China could be averted.

Trump tweeted he would postpone a March 1 deadline for higher tariffs on Chinese goods and looked forward to a meeting with Chinese President Xi Jinping when a Sino-American deal was sealed.

Goldman Sachs analysts said on Monday that “the near-term outlook for oil is modestly bullish over the next two to three months”, but added that the outlook for later in 2019 was weaker due to a surge in US exports and an “an increasingly uncertain economic, policy and geopolitical backdrop”.

US exports hit a record 3.6-million barrels a day this month.

Reuters