LONDON (Reuters) - Oil rose for a fifth day on Monday, on track for its strongest first quarter in eight years, thanks to a growing belief among investors that OPEC’s supply cuts will prevent a build-up in unused fuel, though concern over China’s economy tempered gains.
Brent futures were last up 16 cents at $66.41 a barrel by 1850 GMT, having touched a 2019 high of $66.83 earlier in the day, while U.S. futures rose 47 cents to $56.04 a barrel.
Oil has risen nearly 25 percent so far this year and is on course for its strongest first-quarter performance since 2011, thanks largely to a commitment by the Organization of the Petroleum Exporting Countries and allies to cut output.
“Our numbers ... do tell us that we are looking at the tightest H1 crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being,” consultancy JBC Energy said in a note.
Refiners around the world are also having to pay more to secure supplies of the medium, or heavy, sour crudes produced by Iran and Venezuela, both of which are under U.S. sanctions.
GRAPHIC: U.S. oil rig count and crude production levels - tmsnrt.rs/2V1n5mN
The broader financial markets eased a little after data showing a drop in Chinese car sales in January raised concerns about the world’s second-largest economy.
Some of this weakness rubbed off on the oil market, but analysts said the overall trend in crude prices remained convincingly upwards for now.
“There are lots of ‘ifs’ and ‘buts’ that could have a profound impact on oil prices; just think of the unpredictable Donald Trump, Brexit, trade talks or an eventual pick-up in Libyan and/or Venezuelan production,” said PVM Oil Associates analyst Tamas Varga.
“Latest available data, however, point in the direction of a tightening market. It is not recommended to swim against the current and presently the ‘oil’ river is flowing north.”
Some analysts said the continued rise in U.S. oil production could act as a drag on the current rally.
U.S. energy companies last week increased the number of oil rigs looking for new supply by three to a total of 857, energy services firm Baker Hughes said in a report last Friday.
“We view the current price rise as exaggerated and see growing correction potential,” Commerzbank said in a note. “The fact that oil production in the U.S. is currently rising significantly more sharply than previously expected is being completely ignored at present.”
Additional reporting by Henning Gloystein; Editing by David Goodman and David Evans