LONDON: Oil prices rose on Friday as involuntary supply cuts from Venezuela and Iran plus conflict in Libya supported perceptions of a tightening market, already underpinned by a production reduction deal from OPEC and its allies.
Brent crude oil futures were at $71.47 a barrel at 1332 GMT, up 64 cents or 0.90 percent and heading for their third weekly gain in a row.
U.S. West Texas Intermediate (WTI) crude futures were at $64.20, up 62 cents or about 1 percent.
For the momentum to continue next week, WTI needs to close today above $64 a barrel and preferably break the resistance of $65 a barrel. Volume has been very strong throughout the week, Petromatrixs Olivier Jakob said.
Oil markets have been lifted by more than a third this year by supply cuts led by the Organization of the Petroleum Exporting Countries, U.S. sanctions on oil exporters Iran and Venezuela, plus escalating conflict in fellow OPEC member Libya.
The head of Libyas National Oil Corporation warned on Friday that renewed fighting could wipe out crude production in the country.
We see Brent and WTI prices averaging $75 per barrel and $67 per barrel respectively through the rest of this year, but risk is asymmetrically skewed to the upside, RBC Capital Markets said in a note.
Geopolitically infused rallies could shoot prices toward or even past the $80 per barrel mark for intermittent periods this summer.
OPEC and its allies meet in June to decide whether to continue withholding supply. Though OPECs de facto leader, Saudi Arabia, is considered keen to keep cutting, sources within the group said it could raise output from July if disruptions continue elsewhere.
On the demand side, most of the worlds growth in fuel consumption is coming from Asia, where Chinas economic growth is expected to slow to its lowest in nearly 30 years at 6.2 percent this year, a Reuters poll showed on Friday.
However, concern over such a slowdown was muted on Friday.
While macro fears of an economic hard landing may be overblown, the concentration risk of global oil demand (in Asia) remains underappreciated, RBC Capital Markets said.