Brent crude hit a new high of over US$79 a barrel on data about higher demand in key markets such as China and OPEC's bullish Monthly Oil Market Report, in which the cartel said the global overhang in oil inventories is all but gone.
The pending U.S. sanctions against Iran have also contributed to the price rise.
Data from China's refineries showed that in April, these processed some 12.06 million barrels of crude daily, up 12 percent on the year and also the second-highest daily throughput rate on record, Reuters noted.
OPEC, for its part, estimated that the excess oil inventories in the OECD had shrunk to just 9 million barrels. This compares with 340 million barrels when OPEC, Russia, and several other producers agreed to cut production to stimulate prices.
OPEC's success with the oil production cutting deal has been to a significant extent aided by Venezuela's catastrophically dropping production as the country grapples with foreign exchange shortage, U.S. sanctions, and a devastating economic crisis.
On the other hand, U.S. production is growing at a pace that made traders hesitate last week after Baker Hughes reported yet another increase in drilling rigs. Yesterday, the Energy Information Administration said it expected shale oil production to hit 7.178 million barrels daily next month thanks to a record-high monthly increase of 144,000 bpd. Related: Higher Oil Prices Look Likely
However, the tailwinds for crude oil currently vastly outnumber the headwinds, so prices will likely continue upwards in the coming days, especially in light of the escalation in Israel following the move of the U.S. embassy from Tel Aviv to Jerusalem that ignited protests in Gaza, prompting an immediate military response from the IDF.
According to Reuters, over the past 12 months crude oil prices have gained 70 percent thanks to a combination of rising demand and restricted supply from the OPEC+ group. Still, the cartel's leader Saudi Arabia and some analysts believe oil prices can rise higher still before they start hurting production.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More