U.S. oil prices rose above $70 a barrel on Monday for the first time since November 2014 while Brent crude prices climbed to fresh highs, as a deepening economic crisis in Venezuela threatened the country's already tumbling oil supplies.
The concerns added to worries over a
looming decision on whether the United States will walk away from a deal
with Iran and instead re-imposes sanctions on Tehran, keeping
international oil markets on edge.
Brent crude oil futures were at
$75.71 per barrel, up 84 cents, or 1.12 percent from their last close
at 0416 GMT after climbing to $75.89 a barrel earlier in the session,
its highest since November 2014.
U.S. West Texas Intermediate
(WTI) crude futures rose 0.95 percent to trade at $70.39 per barrel, up
66 cents from their last settlement.Analysts warned that the deepening
economic crisis in major oil exporter Venezuela threatened to further
crimp its production and exports.
Shannon Rivkin, investment
director of Australia's Rivkin Securities, said that oil prices had been
driven up due to "growing concerns over the economic collapse of
Venezuela and its oil industry, plus possible new sanctions against Iran
from the Trump administration."
U.S. oil firm ConocoPhillips has
moved to take key Caribbean assets of Venezuela's state-run PDVSA to
enforce a $2 billion arbitration award, actions that could further
impair PDVSA's declining oil production and exports.
oil output has halved since the early 2000s to just 1.5 million barrels
per day (bpd), as the South American country has failed to invest enough
to maintain its petroleum industry.
Beyond Venezuela's woes Greg
McKenna, chief market strategist at futures brokerage AxiTrader, said
"the big story this week is going to be about oil and the Iran Nuclear
deal." Most market participants expect Trump to withdraw from the pact,
Iran re-emerged as a major oil exporter in 2016 after
international sanctions against it were lifted in return for curbs on
Iran's nuclear program.
Expressing doubts over Iran's sincerity,
Trump has threatened to walk away from the 2015 agreement by not
extending sanctions waivers when they expire on May 12, which would
likely result in a reduction of Iran's oil exports.
however, are becoming cautious about ever higher oil prices.Hedge funds
cut their net long U.S. crude futures and options positions in the week
to May 1 by 11,825 contracts to 444,060, according to the U.S. Commodity
Futures Trading Commission.
Looming over markets is surging U.S.
output, which has soared by more than a quarter in the last two years,
to 10.62 million bpd.
U.S. output will likely rise further this
year, towards or past Russia's 11 million bpd, as its energy firms keep
drilling for more.
U.S. energy companies added nine oil rigs
looking for new production in the week to May 4, bringing the total
count to 834, the highest level since March 2015, energy services firm
Baker Hughes said last Friday.