Oil prices have increased on account of concerns related to potential supply disruptions amidst tension in the Middle East.
Brent crude oil futures LCOc1 jumped 33 cents, or 0.5%, trading at $71.75 per barrel, while US West Texas Intermediate (WTI) crude futures CLc1 increased by 36 cents, or 0.5%, to reach $66.58, according to Reuters.
Various factors contributed to the rise in prices, including a potentially spreading conflict in the Middle East and fresh US sanctions against Iran.
Oil prices were also supported by declining production due to political and economic crisis in Venezuela.
Oanda Asia-Pacific trading head Stephen Innes was quoted by the news agency as saying: “With so many potential supply disruptors in play and few signs that the current market upheaval will end any time soon, traders continue to pay the geopolitical risk premium.
“Oil prices should remain bid at least through the Iran nuclear deal deadline (12 May) if not for the remainder of 2018.”
Brent futures are trading at a level around 16% more than their 2018-low in February, with continuing support from output cuts by the Organisation of the Petroleum Exporting Countries (OPEC).
Meanwhile, the US shale producers continue to pump out more crude, with production now at 10.53 million barrels per day.
Phillip Futures Benjamin Lu was quoted by the news agency as saying in a note: “US shale producers have been quietly capitalising on higher oil prices with increasing rig counts seen. A staggering amount of 73 rotary rigs have been placed since January 2018.
“As such, we expect a softening in crude oil prices as markets adjust from a bullish streak.”
Based on data released by the US Energy Information Administration (EIA), US shale oil production is expected to continue its growth story for the fourth consecutive month in May, rising by 125,000 barrels per day to seven million barrels per day.