Oil rose on Monday, hitting three-week highs, supported by strong U.S. demand and comments from Saudi Arabia that it would continue to curb production in line with OPEC-led efforts.
Brent crude rose 19 cents to settle at $67.50 a barrel. During the session, it hit a three-week high of $67.90. U.S. West Texas Intermediate futures rose 36 cents to settle at $63.91 a barrel, after hitting a 20-day high of $64.24.
Both benchmarks rose last week – Brent by almost 4 percent and WTI by 3 percent.
“Today and this week are going to be critical to answering the question, is this a market correction or is this a resumption of an uptrend?” Reuters quoted Walter Zimmerman, chief technical analyst at United-ICAP as saying.
Prices were supported by Saudi Energy Minister Khalid al-Falih, who said on Saturday the country’s January-March crude production would be well below output caps, with exports averaging less than 7 million barrels per day, according to Reuters report.
He said Saudi Arabia hoped OPEC and its allies would be able to relax production cuts next year and create a permanent framework to stabilize oil markets after the current agreement on supply cuts ends this year.
The possibility of an eventual end to production cuts, however, may be a bearish development longer-term, said Bob Yawger, director of energy futures at Mizuho.
Data released last week by the U.S. Energy Information Administration showed a surprise draw in crude inventories.
Demand in Europe may also be getting some help. A cold snap across the continent has encouraged some refiners to delay maintenance, which could support demand and help end a bout of profit-taking, analysts said.
“Our view is demand will be strong enough, but we don’t see a big breakout,” said Natixis oil analyst Joel Hancock, adding he expected a price in the range of $60 to $70 this year.
Libya’s National Oil Corp said on Saturday it had declared force majeure on the 70,000-bpd El Feel oilfield after a protest by guards closed the field.