Oil surged 2% across Monday hitting a fresh high for 2019 amid concerns that supply will tighten further after escalating conflict in Libya.
Oil supply has been tightening across the year amid continued production cuts from OPEC, and sanction on Iran and Venezuela.
The conflict in Libya escalating over the weekend has prompted fears of oil supply outages in the region. This overshadowed the largest increase in active US rigs since May.
Meanwhile, the demand side of the oil equation has been taking a back seat recently. Friday’s rebounding NFP report has boosted optimism that demand will remain supported.
Crude rallied to a 5-month peak of $64.39 and has since eased off its highs. Oil looks well supported by fundamentals at these levels.
OPEC would need to put its foot back on the production pedal in order for the price of oil to pull back significantly. The next OPEC meeting is not until June. However, if the price of oil rises too much further, investors could start to speculate that OPEC will vote to ramp up production once again, putting pressure on the price of the black stuff.
WTI in trading above its main sma’s leaving the bull trend firmly in play. After pushing through $64, the bulls will be looking to take on $64.70 before 65.10. On the downside support can be seen at $63.25 and $62.50.