An oil tanker is seen at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER
An oil tanker is seen at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER

Tokyo — Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supply kept prices well supported.

Brent crude oil futures were at $71.46 a barrel at 2.33am GMT, down 9c, or 0.1%, from their last close, having hit their highest since November 12 on Friday at $71.87.

US West Texas Intermediate (WTI) crude futures were at $63.63 a barrel, down 26c, or 0.4%, from their last settlement.

“I would expect oil to trade in a relatively tight band around $70 for the time being,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore, pointing to mixed signals on supply from the US and Opec and its allies.

The head of Libya’s National Oil Corp warned on Friday that renewed fighting could wipe out crude production in the country.

Oil cartel Opec and its allies meet in June to decide whether to continue withholding supply. Opec, Russia and other producers, are reducing output by 1.2-million barrels a day from January 1 for six months.

“Leading edge indicators on US supply suggest activity levels are stepping up which is supportive for strong production growth in the second half,” said Chauhan

But at the same time, “murmurings from various ministers of the Opec-plus pact suggest supply from the group will not be ramped up pre-emptively as per last summer,” he said.

Opec’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.

Russia’s finance minister, Anton Siluanov, was quoted by the TASS news agency as saying on Saturday that Russia and Opec may decide to boost production to fight for market share with the US but this would push oil prices as low as $40 a barrel.

US energy companies last week increased the number of oil rigs operating for a second week in a row, bringing the total count to 833, General Electric’s Baker Hughes energy services firm said in its closely followed report on Friday.

The rig count fell for the past four months as independent exploration and production companies cut spending on new drilling to focus on earnings growth instead of increased output.

Reuters