Oil rose on Tuesday, holding above $70 a barrel for a third day, supported by concerns that tensions in the Middle East could lead to supply disruptions, although with global output rising fast, investors remained cautious. Brent crude futures LCOc1 were up 28 cents on the day at$70.40 a barrel by 0848 GMT, while West Texas Intermediate (WTI) crude futures CLc1 were up 19 cents at $65.74 a barrel. The oil price has risen by more than 7 percent so far this month and by 5.3 percent in the first three months of the year, putting it on track for a third consecutive quarterly gain, something the market has not witnessed since late 2010.
Crude oil prices rose after an IEA report said OPEC demonstrated “record compliance” of 90 percent with an output cut deal struck late last year. The group also revised up their 2017 oil demand forecast for the third consecutive month. Gold prices managed a shallow recovery having dropped to a four-day low in what appeared to be corrective price action ahead of the weekend.
Looking ahead, EIA drilling productivity data and OPEC’s monthly report are in focus. The market-moving potential of the self-congratulatory tone likely to be on offer in the latter may have been somewhat diminished by the IEA. The former may temper the bulls’ exuberance however, showing that strong growth in swing production may undermine the cartel’s efforts.