Oil hit a five-month high above $71 (54.2 pounds) a barrel yesterday, supported by concern that violence in Libya could further tighten supply, although Russian comments signalling willingness to pump more dampened the rally.
Supply curbs led by the Organisation of the Petroleum Exporting Countries have underpinned a more than 30 percent rally this year for Brent crude, despite downward pressure from fears of an economic slowdown and weaker demand.
Brent, the global benchmark, rose to $71,34 a barrel, the highest since November, and by 1304 GMT was down 34 cents at $70,76. US crude also hit a November 2018 high of $64,79 and was later down 19 cents at $64,21.
“The mood is increasingly turning bullish, but several feedback loops are about to start spinning that stand in the way of a prolonged oil rally,” said Norbert Ruecker of Swiss bank Julius Baer.
Russia, a participant in the OPEC-led supply cuts that currently expire in June, signalled on Monday it wanted to raise output when it meets with OPEC because of falling stockpiles.
Energy Minister Alexander Novak said on Tuesday there would be no need to extend the supply-curbing deal if the market was expected to be balanced in the second half of the year. US sanctions on Iran and Venezuela have deepened the OPEC supply cut and concern has grown this week about the stability of Libyan output. The OPEC member pumps around 1,1 million barrels per day (bpd), just over 1 percent of global supply. — Reuters.