Oil prices rose to their highest levels since May early on Monday as a dip in US output tightened the market and the threat of sanctions against Venezuela kept traders on edge. Brent crude futures, the international benchmark for oil prices, were trading up 18 cents or 0.3 percent at $52.70 per barrel at 0009 GMT. Prices earlier hit $52.76, the highest level since May 25.
US West Texas Intermediate (WTI) crude futures were up 11 cents, or 0.2 percent, at $49.82 per barrel. The gains put both crude benchmarks on track for six consecutive days of gains.
Oil prices have risen nearly 10 percent since the last meeting of leading members by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, when the group discussed potential measures to further tighten oil markets.
“WTI threatened to break through $50 per barrel, while Brent pushed above $52 per barrel as the fundamentals continue to suggest a more balanced crude oil market,” ANZ bank said on Monday. “The front of end of the curve has moved into backwardation, a sign the spot physical market is tightening,” it added.
Backwardation is a market condition in which prices for immediate delivery of a product are higher than those later on. Brent prices for delivery in September are currently around 35 cents above those for October.
After rising by more than 10 percent since mid-2016, US oil production dipped by 0.2 percent to 9.41 million barrels per day (bpd) in the week to July 21. US crude oil inventories have fallen by almost 10 percent from their March peaks to 483.4 million barrels.
Drilling for new US production is also slowing down, with just 10 rigs added in July, the fewest of any month since May 2016.
Markets were also concerned by reports that the Trump administration is considering imposing US sanctions on Venezuela’s vital oil sector in response to Sunday’s election of a constitutional super-body that Washington has denounced as a “sham” vote.