Latest OPEC supply cuts push oil to best start since 2011

Oil is on track for its strongest first quarter performance in eight years after rising nearly 25% so far in 2019, following OPEC’s latest move to cut production amongst its members.

International standard Brent crude reached a three-month high of US$66.79 per barrel yesterday and US standard West Texas Intermediate rose to $56.46 by the evening’s trading.

The gains in the oil price are largely thanks to OPEC’s recent commitment to prevent a supply build-up by cutting production, with the group’s largest member Saudi Arabia leading the way in reducing exports by a further 500,000 barrels per day (bpd) to 9.8 million.

“Our numbers…do tell us that we are looking at the tightest H1 crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being,” consultancy JBC Energy said in a note.

Uncertainty around US President Donald Trump, Brexit, international trade and oil production in Libya and Venezuela are also impacting markets, PVM Oil Associates analyst Tamas Varga told Reuters.

“Latest available data, however, point in the direction of a tightening market. It is not recommended to swim against the current and presently the ‘oil’ river is flowing north,” he said.