New York — Oil climbed more than 1 percent with U.S. crude futures hitting a 2019 high on Monday after tight supply and positive signs for the global economy drove both benchmarks’ largest first-quarter gains in nearly a decade.
U.S. West Texas Intermediate (WTI) futures were up 85 cents, or 1.4 percent, at $60.99 by 10:30 a.m. ET (1430 GMT), after reaching their highest in more than four months at $61.15. WTI gained 32 percent in the first quarter.
Brent crude for June delivery was up 93 cents, or 1.4 percent, at $68.51 after rising by more than a dollar in earlier trading and gained 27 percent in the January-March period.
Production cuts from the Organization of the Petroleum Exporting Countries helped push supply to a four-year low in March, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group’s supply-cutting pact while Venezuelan output fell further due to U.S. sanctions and power outages.
The energy complex is off to a strong start with help from favorable Chinese data and associated weakening in the U.S. dollar, Jim Ritterbusch, president of Ritterbusch and Associates, said.
“This bull market in energy that has entered its fourth month in duration appears capable of continuing,” he said.
U.S. construction spending increased for a third straight month in February, offering some good news on the economy following a string of weak reports.
The U.S. data followed positive Chinese factory gauges and signs of progress in Sino-U.S. trade talks have boosted sentiment, helping to buoy regional stock markets.
The United States and China said they made progress in trade talks that concluded on Friday in Beijing, with Washington saying the negotiations were “candid and constructive” as the world’s two largest economies try to resolve their trade war.
China’s State Council said on Sunday that the country would continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1, in a goodwill gesture following a U.S. decision to delay tariff hikes on Chinese imports.
Analysts have turned cautiously optimistic on the oil market, a monthly Reuters poll showed on Friday, lifting their forecast for the average Brent price in 2019 for the first time in five months to $67.12.
Hedge funds and money managers raised bullish wagers on U.S. crude to the highest in more than five months, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Brent crude speculators also raised net long positions by 13,429 contracts to 322,035 in the week to March 26, data from the Intercontinental Exchange showed. That was the highest level since late October.
On the supply front, booming American production has steadied, with the U.S. government reporting on Friday that domestic output in the world’s top crude producer edged lower in January to 11.9 million barrels per day.
U.S. energy companies last week reduced the number of oil rigs operating to the lowest level in nearly a year, cutting the most rigs during one quarter in three years, energy services firm Baker Hughes said.
Meanwhile, oil prices are being propped up by U.S. sanctions on Iran and Venezuela along with voluntary supply cuts by the OPEC and other major producers.
Output from OPEC countries fell by 280,000 barrels per day (bpd) from February to 30.4 million bpd, according to a Reuters survey, its lowest monthly rate since 2015.
Washington has instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, sources told Reuters, and has urged Malaysia and Singapore to be vigilant for illicit Iranian crude in its waterways.
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