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Brent oil briefly touches US$70/barrel on tight supply
[NEW YORK] Brent oil prices rose on Thursday, briefly touching US$70 a barrel for the first time since November as expectations of tight global supply outweighed pressure from rising US production and less robust global demand indicators.
International benchmark Brent futures settled up 9 cents at US$69.40. Brent touched a session high of US$70.03, the highest since Nov 12 when it last traded above US$70.
US West Texas Intermediate (WTI) crude fell 36 cents a barrel to settle at US$62.10. The contract hit US$62.99 on Wednesday, its highest since November.
Brent has gained 30 per cent this year, while WTI has risen nearly 40 per cent, underpinned by US sanctions on Iranian and Venezuelan crude, Opec production cuts and rising global demand.
"There is a clear bias to the upside with the supply restrictions," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"And there's a much better than expected demand picture after the recent China and US PMI numbers, along with a potential kicker from any U.S.-China trade agreement," Mr McCarthy said.
The Caixin/Markit services purchasing managers' index (PMI) rose to 54.4, the highest since January 2018 and up from February's 51.1, a private business survey of China's service sector showed on Wednesday.
US-China trade talks made headway last week in Beijing and White House economic adviser Larry Kudlow said on Wednesday the sides aim to bridge differences during further talks.
The refinery maintenance season is drawing to a close, which should boost demand for crude, said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.
"The physical market is very strong and we are now starting to trade post-turnaround barrels, which should mean physical markets strengthen and flat prices should follow," Mr Chauhan said.
Still, US crude's turn to the negative demonstrated the market's fears of weak demand and oversupply.
"We keep having these headwinds," said John Kilduff, a partner at Again Capital Management in New York. "Save for that one China PMI number, the economic data continues to be not great." Bearish economic indicators globally, including lower German factory orders, have limited the upside for the market, he said.
German industrial orders fell in February by the sharpest rate in more than two years, according to data released on Thursday. Orders were hit by a slump in foreign demand, compounding worries that Europe's largest economy had a weak start to the year.
US crude inventories rose 7.2 million barrels last week. Analysts had forecast a decrease.
US crude production climbed by 100,000 barrels per day to a record 12.2 million bpd, government data showed.