Brent crude tops $71 per barrel

Benchmark along with US West Texas Intermediate equivalent at highest since November

All eyes will be on the group’s meeting next week after crude prices slumped to a one-year low below $46 a barrel in New York. AP

Oil prices rose on Tuesday as markets continued to tighten amid Opec-led supply cuts, US sanctions against Iran and Venezuela, and escalating violence in Libya.

International benchmark Brent futures hit their strongest level since last November at $71.34 per barrel, before easing to $71.27 at 12.15PM UAE time.

US West Texas Intermediate (WTI) crude oilfutures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.63 per barrel at the same time.

Oil markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of Opec has been withholding supply to prop up prices.

Brent and WTI futures have risen by 40 per cent and 30 per cent respectively since the start of the year.

Goldman Sachs said an oil supply deficit had opened up early this year.

"We expect the drivers of this deficit to persist through 2Q19" due to a "shock and awe implementation of the Opec cuts ... further tightening of US oil sanctions and an only moderate increase in shale production for now," the US bank said in a note.

Goldman said it expected Brent to average $72.50 per barrel during the second quarter, up from a previous forecast of $65 per barrel.

Prices have been further lifted this week by escalating violence in Libya, a significant supplier of oil to Europe, which produced around 1.1 million barrels per day (bpd) of crude in March.

Yet despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude pricesfrom rising even higher, traders said.

And while fears of a global recession ebbed following strong US jobs figures and improved Chinese manufacturing data late last week, Bank of America Merrill Lynch said there was still a "significant slowing in growth globally" in 2019.

The bank said it expected Brent and WTI to average $70 per barrel and $59 per barrel, respectively, in 2019, and $65 per barrel and $60 per barrel in 2020.

Goldman Sachs also said oil prices "will decline gradually from this summer as shale and Opec production increases."

Russia, not an Opec-member but a reluctant participant in the supply cuts, signalled on Monday it wanted to raise output when it meets with OPEC in June because of falling stockpiles.

In the United States, crude oil production has risen by more than 2 million bpd since early 2018, to a record 12.2 million bpd, with many analysts expecting output to exceed 13 million bpd soon.