Oil climbs to five-month high on OPEC cuts, U.S.
sanctions and Libya fighting
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[April 08, 2019]
By Henning Gloystein and Dmitry Zhdannikov
SINGAPORE/LONDON (Reuters) - Oil prices
rose to their highest level since November 2018 on Monday, driven by
OPEC supply cuts, U.S. sanctions against Iran and Venezuela and fighting
in Libya as well as strong U.S. jobs data.
International benchmark Brent futures were at $70.66 per barrel at 1000
GMT on Monday, up 32 cents, or 0.5 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 30 cents, or
0.5 percent, at $63.38 per barrel.
Brent and WTI both hit their highest since November at $70.83 and $63.53
a barrel, respectively, early on Monday.
To prop up prices, the Organization of the Petroleum Exporting Countries
(OPEC) and non-affiliated allies like Russia, known as OPEC+, pledged to
withhold around 1.2 million barrels per day (bpd) of supply from the
start of this year.

"OPEC's ongoing supply cuts and U.S. sanctions on Iran and Venezuela
have been the major driver of prices throughout this year," said Hussein
Sayed, chief market strategist at futures brokerage FXTM.
"However, the latest boost was received from an escalation of fighting
in Libya which is threatening further supply disruption," he added.
Strong U.S. jobs data on Friday was also still supporting markets on
Monday.
Despite the host of price drivers, there are still factors that could
bring oil prices down later this year.
Russia is a reluctant participant in its agreement with OPEC to withhold
output and it may increase production if the deal is not extended before
it expires on July 1, Energy Minister Alexander Novak said on Friday.

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Storage tanks are seen
at Ecopetrol's Castilla oil rig platform, in Castilla La Nueva,
Colombia June 26, 2018. REUTERS/Luisa Gonzalez/File Photo

Another key architect of the OPEC-Russia deal, Kirill Dmitriev, the head
of Russia's direct investment fund, said on Monday OPEC and allies
should raise output from June. Dmitriev previously said it was too early
to pull back from cuts.
Russian oil output reached a national record high of 11.16 million bpd
last year.
In the United States, crude production reached a global record of 12.2
million bpd in late March.
U.S. crude exports have also risen, breaking through 3 million bpd for
the first time earlier this year.
There also remain concerns about the health of the global economy,
especially should China and the United States fail to resolve their
trade dispute soon.
"Global demand has weakened, and existing tariffs on Chinese goods
shipments to the U.S. are providing an additional drag," rating agency
Moody's said on Monday, although it added that Chinese stimulus measures
would likely support growth over 2019.

For a graphic on U.S. crude oil production & exports, see - https://tmsnrt.rs/2ULQiTd
(Reporting by Henning Gloystein; Editing by Tom Hogue and Kirsten
Donovan)
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