Oil near two-month high as producers set to meet again
LONDON (Reuters) — Oil prices rose on Monday, putting July on track to become the strongest month so far this year, as news of a producers' technical meeting next week added to bullish sentiment driven by the threat of US sanctions against Venezuela.
Investors also eyed a tightening US market after heavy inventory falls and slower new oil rig additions last week.
"Sentiment in the oil market became very bullish after OPEC said it will meet with partners in Abu Dhabi next week to discuss compliance," said Frank Schallenberger, head of commodity research at LBBW.
Some OPEC and non-OPEC members will meet on Aug. 7-8 in Abu Dhabi to assess how the group can increase compliance with production cuts that began on Jan. 1.
Benchmark Brent crude traded at $52.60 a barrel at 1200 GMT, up 8 cents from Friday's close. Brent earlier hit $52.92 a barrel, its highest since May 25.
US light crude oil traded briefly above $50 per barrel for the first time in two months before easing back to around $49.71 a barrel, unchanged on the day.
Hedge funds and money managers have raised bullish bets on US crude oil to their highest in three months, US data show.
The United States is considering imposing sanctions on Venezuela's oil sector in response to Sunday's election of a constitutional super-body, which Washington has denounced as a "sham" vote.
In Europe, a production outage at Shell's 404,000-bpd Pernis refinery in the Netherlands following a fire sent benchmark European diesel margins, which reflect the profit made from refining crude oil into the road fuel, to their highest since November 2015 at $14.60 a barrel.
US production has hampered efforts to rebalance the market but signs the market is tightening have emerged.
"Strong increases in the price of oil ... (were) fueled in large part by the substantial drawdowns in US inventories over the past several weeks," said William O'Loughlin, analyst at Rivkin Securities.
US crude inventories have fallen by 10% from their March peaks to 483.4 MMbbl.
US output dipped by 0.2% to 9.41 MMbpd in the week to July 21, after rising by more than 10% since mid-2016.
Drilling for new US production is also slowing, with just 10 rigs added in July, the fewest since May 2016.
Reporting by Karolin Schaps; Additional reporting by Ahmad Ghaddar, Ron Bousso and Christopher Johnson in London and Henning Gloystein in Singapore; editing by Jason Neely
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