Oil climbed to a four-month high in New York as a further retreat in OPEC’s production signaled that global markets are tightening.
Futures rose as much as 0.8 percent to the highest level since November. OPEC crude production fell for a fourth month in March as Saudi Arabia forged ahead with cutbacks and as power blackouts in Venezuela further squeezed supplies, a Bloomberg survey showed on Monday. U.S. stockpiles probably declined by 900,000 barrels last week, according to another Bloomberg survey before government figures are published on Wednesday.
Oil has rallied around 36 percent this year due to the effectiveness of the Saudi Arabian-led production cuts, together with receding fears over the global growth outlook. The output reductions, which are set to expire in June, could be easily extended, Iranian Oil Minister Bijan Namdar Zanganeh said Monday in Moscow after meeting his Russian counterpart Alexander Novak.
“The oil market has recently been supported by supply considerations,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “The general belief is that the OPEC+ effort is sufficient to reduce global oil inventories in the medium term.”
West Texas Intermediate for May delivery rose as much as 50 cents to $62.09 a barrel on the New York Mercantile Exchange, the highest since Nov. 8. It traded at 62.07 as of 11:06 a.m. in London.
Brent for June settlement increased 37 cents to $69.38 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude’s premium over WTI for the same month narrowed to $7.17 a barrel.
The 14 OPEC members pumped 295,000 barrels less oil a day in March than in February, restricting total output to 30.385 million barrels, according to a Bloomberg survey of officials, analysts and ship-tracking data. Saudi Arabia cut production to a four-year low of 9.82 million barrels a day.
Venezuelan production slumped to 600,000 barrels a day last month, from around 1 million in February, as power blackouts forced the key oil port of Jose to close for nearly eight days.
The threat of additional U.S. sanctions is hanging over Iranian supply, while the White House is set to decide by early May if waivers allowing some countries to keep buying oil from the Persian Gulf nation will be extended or not.
Other oil-market news: OPEC and its allies will probably extend their output cuts of 1.2 million barrels a day into the second half, but compliance could be significantly lower, DNB Markets analyst Helge Andre Martinsen said in an interview in Houston. Saudi Aramco can pump oil at a fraction of the cost of rivals and extracts more than the output of the five biggest international producers combined, according to figures from the company’s dollar bond offer prospectus.