Picture: REUTERS
Picture: REUTERS

London — Oil prices rose on Friday amid oil cartel Opec-led supply cuts and US sanctions against Iran and Venezuela, putting crude markets on track for their biggest quarterly rise since 2009.

Brent crude oil futures were up 67c at $68.49 a barrel by 10.39am GMT, set for a gain of more than 27% in the first quarter. US West Texas Intermediate (WTI) futures were at $60 a barrel, up 70c, and on track for a rise of more than 32c over the January to March period.

For the two futures contracts, January to March 2019 is the best-performing quarter since the second quarter of 2009, when both gained about 40%.

Oil prices have been supported for much of this year by an agreement between the Opec and allies such as Russia (known as Opec+) to cut output by about 1.2-million barrels per day (bpd).

“Production cuts from the Opec+ group of producers have been the main reason for the dramatic recovery since the 38% price slump seen during the final quarter of last year,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Barclays bank said on Friday that oil prices “are likely to move still higher in the second quarter and average $73 a barrel ($65 WTI), and $70 for the year”.

Prices shrugged off a tweet from US President Donald Trump on Thursday calling for Opec to boost crude production.

“While Opec, and, above all, Saudi Arabia, appeared in November to be obeying US President Trump’s repeated demands to increase oil production, his tweets now are more likely to fall on deaf ears,” Commerzbank said in a note.

“This time, Opec will probably be more concerned about a fragile balance on the oil market, for the supportive factors that are still responsible for stability [but] could soon turn negative.”

Opec and its allies are scheduled to meet in June to set policy, but some cracks in the union are emerging. Opec’s de facto leader Saudi Arabia favours cuts for the full year while Russia, which joined the agreement reluctantly, is seen as less keen to restrict supply beyond September.

US sanctions on Opec members Iran and Venezuela are also buoying prices. Washington is exerting further pressure on oil traders to cut oil dealing with Venezuela or face sanctions themselves.

Bank of America said it expected oil prices to rise in the short term, with Brent forecast to average $74 a barrel in the second quarter. Heading towards 2020, however, the bank warned of a recession.