Crude oil prices hit highest level in seven weeks

BP_Alexander

BP_Alexander

The Energy Information Administration reported an decline in crude oil inventories of 2.6 million barrels for the week to March 16, pushing up prices in concert with rising Middle Eastern tensions, worries about Venezuela's production slide despite rising output in the United States.

Brent crude, the global benchmark, was up almost 1% at $66.69 a barrel on London's Intercontinental Exchange.

US West Texas Intermediate (WTI) crude futures were at US$62.02 (RM242.48) a barrel at 0145 GMT, down 32 cents, or 0.5 per cent, from their previous close.

"The move today is more to do with geopolitical tensions than underlying fundamentals, but I don't expect that to last", PVM Oil Associates strategist Tamas Varga said.

The compliance figures reflect both high adherence by top exporter Saudi Arabia and other Gulf OPEC countries, as well as an involuntary slide in production in Venezuela, whose output is dropping amid an economic crisis.

Meanwhile, oil prices declined Monday as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply.

"Geopolitical risks and uncertainties are rising in the market as the USA and Saudi Arabia share the same interest, which is isolating Iran", Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone in Seoul.

PM Modi congratulates Angela Merkel on her re-election
But she added: "Of course, it's also the case that this was an exceptional humanitarian situation". All Germans need to benefit from the longest economic boom since 1990, she said.

The International Energy Agency said last week that Venezuela, where an economic crisis has cut oil production by nearly half since early 2005 to well below 2 million barrels per day, was "clearly vulnerable to an accelerated decline", and that such a disruption could tip global markets into deficit.

Arguably held together by Russia's involvement, the Declaration of Cooperation has so far helped to prop up oil prices to appreciable levels in the global oil market.

The Organisation of Petroleum Exporting Countries and its partners, which are trying to ease a global glut via output cuts, are said to have complied with pledged curbs at a rate of 138% in February.

The bullish report was somewhat tempered by US crude production, which climbed to a fresh record of 10.4 million barrels per day in the week.

The American Petroleum Institute (API) reported a draw of 2.739 million barrels of U.S. crude oil inventories for the week ending March 16. Brent is the benchmark for several Middle East and other global crudes.

"US shale production is putting a big cap on oil prices", Satoru Yoshida, a commodity analyst at Rakuten Securities, said by phone from Tokyo.

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