Brent crude oil prices hit 2019 highs above $65 per barrel on Friday, spurred by OPEC-led supply cuts and a partial shutdown of Saudi Arabia’s biggest offshore oil field.
Brent rose as high as $65.10, pushing past the $65 mark for the first time this year, before edging back to $64.89 a barrel by 0531 GMT. That was still 0.5 percent above the last close.
The international benchmark for oil prices is at a near 3-month high and set for a 4.5 percent gain for the week.
U.S. West Texas Intermediate (WTI) crude futures were at $54.61 per barrel, up 20 cents, or 0.4 percent, from their last settlement.
Traders said prices were pushed up by the partial closure of Saudi Arabia’s Safaniyah, its biggest offshore oil field with a production capacity of more than 1 million barrels per day (bpd).
The shutdown occurred earlier this week, a source said, and it was not immediately clear when the field would return to full capacity.
The partial closure comes on top of voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia the the de-facto leader, aimed at tightening the market.
The group as well as some non-OPEC producers including Russia late last year agreed to cut crude output by a joint 1.2 million bpd. Top exporter Saudi Arabia said it would cut even more in March than the deal called for.
Russia has cut its oil production by 80,000-90,000 barrels per day from its level in October, Moscow’s reference level for its cuts, the country’s energy minister said.
“Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply,” Bank of America Merrill Lynch (NYSE:BAC) said in a note.
It also expects “a 2.5 million barrels per day drop in OPEC supply from 4Q18 into 4Q19.”
Standing against these declines is soaring U.S. crude production, which rose by more than 2 million bpd last year, to 11.9 million bpd, making America the world’s biggest oil producer.
Most analysts expect U.S. output to rise past 12 million bpd soon, and perhaps even hit 13 million bpd by the end of the year.
Rising U.S. shale oil supply, increasing spare capacity within OPEC and stagnating fuel consumption meant the medium-term oil price outlook was lower, BoAML said.
“We see growing downside risks to medium-term oil prices on rising U.S. supply and slower consumption,” the U.S. bank said. It expected Brent to range between $50 and $70 per barrel in the coming five years.