LONDON (Reuters) - An improving economic outlook is driving the rise in oil prices and the rally is expected to continue, Libya’s top oil official said on Tuesday as crude hit a six-month high.
Oil climbed to $60.48 a barrel on Tuesday, the highest since November, tracking gains in equities in the last few months on hopes of economic recovery. The rally has come despite falling oil demand and rising inventories.
“The economic situation is improving; this is improving the prices and we think they are going to improve even more,” Shokri Ghanem, chairman of Libya’s National Oil Corporation, told Reuters by telephone from Tripoli.
The Organization of the Petroleum Exporting Countries has agreed to lower its output by 4.2 million barrels per day (bpd) since September to prop up oil prices. It meets to set policy on May 28 in Vienna.
So far, comments from OPEC ministers suggest the group is unlikely to reduce supply further. But prices are still lower than the $70-$75 a barrel that OPEC officials say is needed to keep up industry investment.
OPEC needs to improve its compliance with agreed production levels, but it is too early to tell if the group needed to cut supply further at the meeting, Ghanem said.
“All options are open, but still we have to have a better grasp of the market behaviour,” he said.
Some estimates of OPEC production, including the group’s own monthly report, show it raised oil supply slightly in April, a sign that rising prices could have prompted members to relax adherence to supply curbs.