Oil hit a 2019 high above $69 a barrel on Tuesday on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an Opec-led supply cut, and as the market became less worried that demand may slow.
The United States is considering more sanctions against Iran, whose oil exports have been halved by existing measures, an official said. A key crude terminal in Venezuela, also under US sanctions, has halted operations again.
West Texas Intermediate for May delivery rose as much as 50 cents to $62.09 a barrel on the New York Mercantile Exchange, the highest since November 8. It traded at 62.07 as of 11:06am in London.
Brent for June settlement increased 37 cents to $69.38 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude’s premium over WTI for the same month narrowed to $7.17 a barrel.
"The supply cuts have been there for a while but Venezuela is not improving," said Olivier Jakob, analyst at Petromatrix. "That is taking a lot of oil away from the market."
Further supply losses from Iran and Venezuela could widen an Opec-led production cut that took effect in January, designed to prevent a price-sapping rise in inventories.
Supply from Opec hit a four-year low in March, a Reuters survey found, because top exporter Saudi Arabia cut more than it had agreed to and due to the involuntary declines.
This week's reports on US supplies are expected to show crude inventories fell, a sign that the Opec curbs are having the impact producers intended.
Six analysts polled by Reuters estimated, on average, that crude stocks fell by 1.2 million barrels in the week to March 29. The first of this week's supply reports, from the American Petroleum Institute, is due at 20.30 GMT.
Oil's pattern on the price charts could lead to further gains. Brent is trading just below the 200-day moving average and a move above this mark would provide additional technical support, Mr Jakob said.
Healthy data on the world's biggest economies, the US and China, also bolstered prices.
Figures showing a rebound in US factory activity in March and a return to growth in Chinese manufacturing eased concern that an economic slowdown could weaken oil demand.
"China's PMI number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand," said Stephen Innes, head of trading and market strategy at SPI Asset Management.