Oil prices on Monday hit their highest levels since November last year, lifted by OPEC-led supply cuts, US sanctions on Iran and Venezuela, and hopes that the Sino-US trade dispute may soon end.

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International Brent crude futures were at $66.66 per barrel at 0746 GMT, up 41 cents, or 0.6 percent, from their last close. Brent earlier climbed to its highest since November 2018 at $66.78 a barrel.

US West Texas Intermediate (WTI) crude oil futures were at $56.07 per barrel, up 48 cents, or 0.9 percent, from their close. WTI prices also rose to their highest since November, at $56.13 per barrel, earlier on Monday.

Prices have been bolstered by a tightening market because of supply cuts organised by the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers like Russia. The group of producer countries agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.

Further supporting crude prices have been US sanctions against oil exporters and OPEC-members Iran and Venezuela.

Financial markets, including crude futures, were also generally supported by hopes that the United States and China would soon resolve their trade disputes, which have dragged on global economic growth.

"OPEC production cuts and US sanctions on both Iran and Venezuela are limiting supply. Trade tensions which have weighed on global growth are showing signs of easing boosting sentiment across markets and lifting oil demand prospects," said Jasper Lawler, head of research at futures brokerage London Capital Group.

SLOWING DOWN

Earlier in the trading day, news of a fall in Chinese car sales in January had raised concerns about how fuel demand in the world's second-largest oil user might fare.

China's vehicle sales last month fell by 15.8 percent versus the same month in 2018, an industry association said on Monday. This continued the 2018 trend, in which China recorded the first annual drop in vehicle sales on record.

So-called new energy vehicle sales in January, which include electric vehicles, registered a 140 percent increase, underlining expectations that oil demand from cars may peak in China in the coming years.

Looming over oil markets in the near term, meanwhile, is the rise in US crude oil production of more than 2 million bpd in 2018, to a record 11.9 million bpd - with signs that US output will rise further.

US energy firms last week increased the number of oil rigs looking for new supply by three, to a total of 857, energy services firm Baker Hughes said in a weekly report last Friday.

That means the US rig count is higher than a year ago when fewer than 800 rigs were active.

First Published:Feb 18, 2019 6:42 AM IST