Oil hits 2019 high as supply squeeze looms; Brent nears $70/bbl

NEW YORK: Oil prices on Tuesday hit their highest level so far in 2019, with Brent crude approaching $70 a barrel, on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut.

Brent futures reached a session peak at $69.52 a barrel, the highest since Nov. 13. The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel.

U.S. West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since Nov. 7.

The United States is considering more sanctions against Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), an official said.

Three of the eight countries to which Washington granted waivers to import Iranian oil have now cut their shipments from Iran to zero, a U.S. special representative said on Tuesday.

Meanwhile, a crude terminal in Venezuela, also under U.S. sanctions, halted operations again due to power problems.

"The latest driver appears to be the idea that tightened supplies are going to create a stronger fundamental picture," said Gene McGillian, director of market research at Tradition Energy. "The market keeps pushing higher."

However, Venezuela stabilized exports in March after shipments fell about 40 percent in February from January.

But further supply losses from Iran and Venezuela could widen an OPEC-led production cut. OPEC supply hit a four-year low in March, a Reuters survey found, due to the involuntary declines and as top exporter Saudi Arabia cut more than agreed.

Russia, the biggest non-OPEC producer in the so-called OPEC+ group, has yet to reach its production-cutting target. Russian oil output declined to 11.3 million barrels per day (bpd) last month, energy ministry data showed.

While the country's output was down by around 112,000 bpd from the October 2018 level, Russia has pledged to cut output by 228,000 bpd from that level.

In the United States, crude inventories rose by 3 million barrels in the week to March 29 to 451.7 million, industry group the American Petroleum Institute said on Tuesday. Analysts had expected a decrease of 425,000 barrels.

U.S. government data will be released on Wednesday.

Oil's pattern on the price charts could lead to further gains. Brent is just below the 200-day moving average and a move above this mark would boost technical support, said Olivier Jakob, analyst at Petromatrix.

Investors have worried for months that weak global economic data could mean slowing demand for crude, but healthier data this week from the United States and China eased concerns about the economy and bolstered prices.

Figures showed a rebound in U.S. factory activity in March  and a return to growth in Chinese manufacturing.