Brent crude futures were up $1.03 at
$46.77 a barrel in early trading, having risen nearly 20 per cent in
April, their largest one-month gain in a year.
The international benchmark earlier hit a 2016 high of $46.81.
U.S. West Texas Intermediate (WTI) crude futures also rose 86 cents to $44.90 a barrel.
Brent received extra support from news
that Saudi Arabia and Kuwait appear no closer to restarting their
jointly operated Khafji oilfield, which produced 280,000 to 300,000
barrels per day
The oilfield had been shut since October 2014 due to environmental problems.
The prospect of an agreement among the
world’s largest exporters to limit production evaporated almost two
weeks ago when a meeting between OPEC members and their non-OPEC
counterparts ended in stalemate.
Since then, Brent has hit its highest
since November and, aided by further evidence of declining output
anywhere from the U.S. shale basin to the North Sea, attracted fresh
investment cash.
“There was definitely a bit of a turning
point when we had the initial sell-off after the producer meeting,” CMC
Markets strategist Jasper Lawler said.
“That got reversed and went on to show
that (a production freeze) was a fairly small part of what had been
supporting the price and really, it’s the supply outlook for the U.S.
coupled with the dollar that is really driving returns.”
WTI was further bolstered after the
American Petroleum Institute reported a draw of nearly 1.1 million
barrels in U.S. crude inventories last week.
Analysts had expected a 2.4-million-barrel build.
The dollar was down on the day, having
fallen about 5 per cent against a basket of currencies since the start
of the year, even as U.S. interest rates are expected to rise.
The U.S. Federal Reserve’s
policy-setting committee meets on Wednesday but is not expected to
announce any change in rates, leaving traders to scour the post-meeting
statement for any clues on the outlook.
posted by Oscar Jonathan
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