Oil hits 2019-high on OPEC supply cuts, U.S. sanctions on Iran and Venezuela

February 18, 2019

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices rose to their highest levels in 2019 on Monday, lifted by OPEC-led supply cuts and by U.S. sanctions on Iran and Venezuela.

U.S. West Texas Intermediate (WTI) crude oil futures hit $56 per barrel for the first time this year, before edging back to $55.89 per barrel by 0051 GMT. That was still 0.5-percent above their last settlement.

International Brent crude futures hit a 2019-high of $66.61 per barrel early on Monday before easing to $66.47 per barrel, still up 0.3 percent from their last close.

For both benchmarks, those were their highest levels since November 2018.

The Organization of the Petroleum Exporting Countries (OPEC), as well as some non-affiliated producers like Russia, agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling more.

Further pushing up crude prices have been U.S. sanctions against oil exporters and OPEC-members Iran and Venezuela.

At least partly offsetting these supply falls has been a surge in U.S. crude oil production by more than 2 million bpd in 2018, to a record 11.9 million bpd.

And there are signs that U.S. output will rise further.

U.S. energy firms last week increased the number of oil rigs looking for new production by three, to a total of 857, energy services firm Baker Hughes said in a weekly report last Friday. RIG-OL-USA-

That means the U.S. rig count is higher than a year ago when under 800 rigs were active.

“The U.S. shale industry continues to show signs of resilience. It increased drilling activity for the third time in four weeks last week,” ANZ bank said.

(Reporting by Henning Gloystein; Editing by Joseph Radford)

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