Oil price hits 2019 high above $63 on sanctions

February 5, 2019

LONDON: Oil hit a two-month high above $63 a barrel on Monday as Opec-led supply cuts and US sanctions against Venezuela’s petroleum industry offset forecasts of weaker demand and an economic slowdown.
The Organization of the Petroleum Exporting Countries and its allies began a new round of supply cuts in January. These curbs, led by Saudi Arabia, have been compounded by involuntary losses that the Venezuelan sanctions could deepen.
Brent crude, the global benchmark, hit $63.40 a barrel, the highest since December 7, and was up 49 cents at $63.24 as of 0918 GMT.
US crude hit a 2019 high of $55.68 and was later up 9 cents at $55.35.
“You have the sanctions on Venezuela, on top of the reduced supply from Saudi Arabia,” said Olivier Jakob, oil analyst at Petromatrix. “There’s no sign of overhang in the crude oil markets.” Opec supply fell in January by the largest amount in two years, a survey found. That offset limited compliance so far by non-Opec Russia. The US sanctions on Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said after examining details announced by the government.
Underlining the lack of excess supply, Jakob cited a rapidly clearing West African crude market and the structure of Brent crude futures, in which the first-month contract is trading near the price of the second month.