TOKYO (Reuters) – Oil prices rose to nearly five-month highs on Tuesday, backed by strong Chinese economic data that dampened concerns about demand, the possibility of further sanctions against Iran and further disruption to the Venezuelan offer.
FILE PHOTO: The sun sets behind an oil pump on the outskirts of Saint-Fiacre, near Paris, France, on March 28, 2019. REUTERS / Christian Hartmann
Brent crude rose 15 cents, or 0.2 percent, to $ 69.16 a barrel at 0636 GMT, having previously hit $ 69.50, the highest since mid-November.
West Texas Intermediate (WTI) futures rose 14 cents, or 0.2 percent, to $ 61.73 a barrel after rising above $ 62 for the first time since early November.
Positive data from the world's largest economies, the United States and China, raised prices, with China's manufacturing sector unexpectedly returning to growth for the first time in four months in March, according to figures released on Monday.
"China's PMI has been the most significant monthly increase since 2012, which should lessen concerns about a potential threat to oil demand," said Stephen Innes, director of trading and market strategy at SPI Asset Management.
The Caixin / Markit Manufacturing Purchasing Managers Index (PMI) expanded at the strongest pace in eight months in March, the figures showed.
"PMI is a key determinant of commodity prices, and I think the markets will swing to the demand side of the equation, as that element is so undervalued," said Innes.
Most Asian equity markets also gained as stronger manufacturing numbers boosted investor confidence.
On the oil supply side, the United States government is considering additional sanctions against Iran targeting areas of its economy that have not been hit before, a senior Trump government official told reporters on Monday.
The official also suggested that the US can not extend sanctions exemptions against Iran's oil exports to a group of eight importers expiring next month.
"That, I think, is where we're going," the official said.
Venezuela's oil export terminal halted operations due to a lack of electricity supply, two sources familiar with the situation said, after restarting on Friday after a long blackout period.
The Organization of Petroleum Exporting Countries (OPEC) production cuts helped push the group's offer to a four-year low in March, according to a Reuters poll.
The world's biggest exporter, Saudi Arabia, has outpaced the group's cutting supply pact, while Venezuelan output has fallen further due to US sanctions and past energy cuts.
(GRAPHIC: Cuts in the OPEC oil supply – March 2019 – tmsnrt.rs/2CI42Y7)
Report of Aaron Sheldrick; editing by Richard Pullin