Brent crude oil prices rise as OPEC+ retains output cuts
Oil prices surged to multi-week highs on Monday after OPEC announced that it plans to keep its production cuts in place throughout 2019.
Oil prices rose to multi-week highs on Monday morning after the Organization of the Petroleum Exporting Countries (OPEC) said that it is considering keeping its output cuts in place to help support the value of the commodity.
Brent crude climbed 34 cents to $72.55 a barrel on Monday morning following the news, while US West Texas Intermediate (WTI) rose 24 cents to $63.
Oil price continues to rally in 2019
On Sunday, Saudi energy Minister Khalid al-Falih said that OPEC+ had reached an agreement to reduce oil supplies at a slow pace, with oil producers eager to provide stability to the needs of what has become a fragile oil market.
OPEC data showed that oil inventories in developed countries rose by 3.3 million barrels month-on-month in March and 22.8 million above their five-year average.
OPEC’s commitment to limiting supply and reducing output has helped oil prices recover after coming close to breaking below $40 a barrel back in November last year.
‘Oil has already rallied around 40% since the start of the year, thanks mainly to OPEC limiting supply. Investors had been growing nervous that OPEC could look to remove the production limits at its next meeting in June, in light of tightening global supply and elevated prices,’ Jasper Lawler, head of research at London Capital Group, said in a note to investors.
Rising tensions in Middle East offer added support to oil prices
Oil prices have found added support from rising tensions in the Middle East, with US President Donald Trump threatening Tehran on Sunday via Twitter after a missile came close to hitting the US Embassy in Baghdad.
‘If Iran wants to fight, that will be the official end of Iran,’ Trump tweeted. ‘Never threaten the United States again!’
US drilling operations have also declined, with energy companies cutting oil rigs to the lowest levels since March 2018, adding to the bullish sentiment oil markets have witnessed in recent weeks.
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