USA crude futures settled 96 cents, or 1.4 percent, firmer at $72.24 a barrel, after touching $72.33, the highest since November 2014. June WTI crude climbed 1.4% to settle at $72.24/bbl for the highest finish for a front-month contract since November 26, 2014, and Brent crude recently rose 1.2% to $79.45/bbl.
Oil extended its three-year high as a new wave of US sanctions on Venezuela stoked concerns over its crude production and as analysts forecast further declines in American stockpiles.
Based on the combined disruptions, analysts at Barclays project that global oil and liquids inventories will drop during the current quarter at the fastest pace since past year. "In two years the country's production decreased from 2.4 to 1.4 million barrels per day, due to poor management of Venezuela's state oil company PDVSA combined with U.S sanctions and legal actions from some oil and gas companies as ConocoPhillips which presses forward on recouping $2 billion from Venezuela", Colasante added.
"Washington has already enforced economic measures that impair Venezuela's ability to finance projects and pay back debt".
However, new uncertainty is rising after the U.S. announced it imposed new sanctions on Venezuela after the secretary of state to the Trump administration Mike Pompeo said that the country's election was fraudulent.
Some analysts have argued that the major decline in oil prices from 2014-2017 helped prolong the current economic expansion and bull market, because the decline in oil prices was beneficial for consumer spending on other areas of the economy and allowed inflation and interest rates to remain historically low.
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World oil prices are rising on Monday, investors are playing out reports of easing tensions in U.S.
Global oil prices have already increased by nearly $ 10 a barrel this fiscal and the expectation is that it would move by another $ 10-$20 a barrel, if the current market conditions remained unchanged. These countries have not been able to meet even their reduced production targets which were given by the Organization of the Petroleum Exporting Countries after the synchronised cuts by member nations.
OPEC, led by Saudi Arabia and non-OPEC oil producing countries headed by Russian Federation had cut their output by 1.8 million barrels a day to prop up oil prices.
But excess supply has now largely been mopped up, with commercial petroleum stocks at their lowest level in over three years and prices having largely recovered.
Brent crude, which reached a four-year high last week went it surpassed $80, has seen a significant increase over the past few weeks starting with President Trump's decision to pull the United States out of Iran nuclear deal.
Gasoline futures gained 1.04% to $2.2565 a gallon.