Oil prices rose to a two-month high today as the market reacted to news of a meeting between oil producers next week and talk of sanctions from the US against Venezuela's oil sector.
July was the strongest month for oil prices so far this year after weeks of bearish sentiment held prices below $50 a barrel.
Brent crude prices neared $53 a barrel earlier today while West Texas Intermediate traded above $50 a barrel. Crude futures settled to $52.65 per barrel and $50.17 per barrel, respectively.
Some members of the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec nations will meet in Abu Dhabi next week to discuss how to increase compliance with a deal to cut production by 1.8m barrels per day (bpd) to March 2018 to curb the global supply glut.
Prices were also moving as traders speculated that the US was considering sanctions for Venezuela's oil sector in response to an election yesterday that the US has called a "sham".
Mihir Kapadia, chief executive and founder of Sun Global Investments, said:
Oil has risen again this time responding to news that the US has threatened sanctions on Venezuela’s oil industry following the latter’s constituent assembly elections. The elections which were widely ignored by the population of Venezuela were condemned by the US as a “sham”.
Kapadia added that oil prices were also boosted by reports of a slowdown of production in the US with a steep drop in inventories and slower new rig additions last week.
"This is a sign that the current demand/supply situation is healthy and the market is tightening. However this may well turn out to be short-lived as prices above $50 have tended to encourage more U.S. oil drilling, and thus adding to the global supply glut," Kapadia said.