Oil prices rallied on Friday, with Brent crude futures hitting fresh 2019 highs amid US sanctions against Venezuela and Iran and supply cuts led by the Organization of the Petroleum Exporting Countries, OPEC.
Brent pushed above $65 per barrel for the first time in 2019, before edging back to $64.91 a barrel which was still 0.5 per cent above the last close.
The International benchmark for oil prices is at a near 3-month high and set for a 4.5 per cent gain for the week.
US West Texas Intermediate (WTI) crude futures were at $54.74 per barrel, up 33 cents, or 0.6 per cent, from their last settlement.
OPEC, and some non-affiliated suppliers including Russia are withholding supply in order to tighten the market and prop up prices.
The producer group known as Opec+ has agreed to cut crude output by a joint 1.2 million barrels per day (bpd). Top exporter Saudi Arabia said it would cut even more in March than the deal called for.
Russia has cut its oil production by 80,000-90,000 barrels per day from its level in October, Moscow’s reference level for its cuts, the country’s energy minister said.
Bank of America Merrill Lynch said in a note that “Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UEA) and involuntary (Venezuela, Iran) declines in OPEC supply.”
The US bank added that it expects “a 2.5 million barrels per day drop in OPEC supply from 4Q18 into 4Q19.”
Standing against the supply cuts is soaring US crude production , which rose by more than 2 million bpd last year, to 11.9 million bpd, making America the world’s biggest oil producer.
Most analysts expect US output to rise past 12 million bpd soon, and perhaps even hit 13 million bpd by the end of the year.