Oil prices rises to $76 as tight current supply in focus

Oil climbed to $76 a barrel yesterday, supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018 and helped by forecasts US inventories fell.

Global benchmark Brent crude has dropped more than $4 from a 3 1/2-year high of $80.50 a barrel on May 17, after reports that OPEC and Russia may increase supply at a June meeting, reversing policy after 17 months of supply curbs.

Brent rose 83 cents to $76.22 a barrel by 1315 GMT, after trading as low as $74.81 earlier. US crude was up 40 cents at $67.13.

“Fundamentally, not much has changed. Oil remains well supported, although the sweet spot has entered a mature phase,” said Konstantinos Venetis, senior economist at TS Lombard. “Some air is fizzling out of the market and position-squaring raises the likelihood of an overshooting to the downside in the run-up to OPEC’s June meeting.”

Political turmoil in Italy has sent the euro to a 10-month low against the dollar on concern a snap election would lead to a eurosceptic government in Rome. A stronger dollar makes dollar-denominated oil more expensive for holders of other currencies.

“A dearth of bullish catalysts will make hard work of any recovery,” said Stephen Brennock of oil broker PVM. The Organisation of the Petroleum Exporting Countries and non-OPEC producers led by Russia have had the pact to curb output by about 1.8 million barrels per day since January 2017, driving down inventories and pushing up oil prices.