Saudi ‘shock therapy’ sends global crude prices to 5-month highs

OPEC-led production cut lends support to prices

As of just after 10am BST, the price of brent crude was at $69.78 per barrel.

US crude oil hit a 2019 high on Monday and Brent gained a dollar after tight supply and positive signs for the global economy drove both benchmarks' largest first-quarter gains in almost a decade.

According to the US Department of Energy, commercial crude oil stockpiles in the States grew by 7.2m barrels over the week ending on 29 March, to reach 449.5m barrels, putting them at their five-year average.

New of oil supply tumbling comes as three of eight countries granted waivers by the United States to import oil from Iran have cut the imports to zero, a USA official said.

OPEC's output hit a four-year low in March.

Amid signs that U.S. oil production growth is stalling and that OPEC is tightening the market and may not move in response to U.S. President Donald Trump's latest Twitter address to the cartel "to increase the flow of oil", oil prices rose on Monday to their highest levels in almost five months.

U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since November 7.

However, future gains will be limited by potential softness in the global economy as well as the ability of USA oil producers to ramp up production when prices spike, said Phin Ziebell, senior economist at National Australia Bank in Sydney.

Oil prices have been supported for much of 2019 by efforts by the Organization of the Petroleum Exporting Countries and allies such as Russian Federation, who have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year.

The latest OPEC+ deal came just months after the group agreed to pump more oil, which in turn partially unwound their original supply-limiting accord that took effect in 2017.

On the demand side, Chinese factory activity unexpectedly rose last month, at the fastest clip in eight months, providing another support to oil prices with signs that oil demand growth could hold resilient going forward.

The identity of the three countries was not revealed by the source.

Oil prices remained high today despite a report from the American Petroleum Institute revealed how United States crude inventories jumped by by 3 million barrels last week.

The EIA also said gasoline inventories dropped by 1.78 million barrels last week, higher than what was forecast.

According to EIA's data, US crude oil refinery inputs averaged 15.8 million barrels per day last week, 18,000 barrels per day more than the previous week's average.

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