Oil breaks above $ 72 as supply concerns build

London (Reuters): Oil prices extended gains yesterday (18 April), lifted by a reported decline in US crude inventories and the risk of supply disruptions.

Brent crude oil futures rose 87 cents to $ 72.45 a barrel by 11:43 GMT, while US WTI crude futures rose 95 cents to $ 67.47.

US crude inventories fell by 1 million barrels last week to 428 million barrels, the American Petroleum Institute (API) said. OPEC’s ministerial committee tasked with monitoring the group’s supply-cutting deal with non-OPEC countries, led by Russia, is to meet in the Saudi city of Jeddah on Friday (20 April). The Organisation of the Petroleum Exporting Countries and 10 rival producers have restrained output by a joint 1.8 million barrels per day since January 2017, and pledged to do so until the end of this year.

Oil has been supported by the perception among investors that tensions in the Middle East could lead to supply disruptions, including renewed US sanctions against Iran, as well as falling output in crisis-hit Venezuela. Dutch bank ING said in a note to clients that Brent had risen back above $ 70 in April due to “geopolitical risks along with some fundamentally bullish developments in the market”.

It raised its average 2018 price forecast for Brent to $ 66.50 a barrel from $ 60.25, and its 2018 WTI forecast to $ 62.50 from $ 57.75. For next year, however, ING expects lower prices due to rising US crude output, which has jumped by a quarter since mid-2016.