Oil prices rose on Monday, bouncing off early losses as Israeli Prime Minister Benjamin Netanyahu said Israel had proof that "Iran lied" about its nuclear weapons capability, and that he was sure U.S. President Donald Trump would do "the right thing" in reviewing the country's nuclear deal with western powers.
"Oil prices have more than doubled since bottoming in early 2016, as the large overhang of inventories has been reduced significantly", said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook.
Brent crude futures were up 61 cents at $75.04 a barrel by 1:43 p.m. EDT (1743 GMT).
Crude has rallied this month amid heightened geopolitical tensions, and as investors await a decision on the Iran accord.
"It's only Trump who wants to back out of the deal, but he wants to back out of so many deals ..." The more-active July contract traded at US$73.16.
Rigs are now at their highest level since March 2015, as the stronger oil prices due to the falling production from OPEC encouraged United States shale production to ramp up.
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U.S. West Texas Intermediate (WTI) futures were up 80 cents on the day at $68.90 a barrel.
Oil prices have risen this month to their highest since late 2014, driven by concern over potential disruptions to Iranian crude flows, but analysts said the market is extremely sensitive to any developments on the nuclear deal and sanctions due to the high degree of uncertainty. The global benchmark crude traded at a US$6.43 premium to June WTI.
The prospect of the United States reimposing sanctions on Iran and OPEC's continued discipline in withholding output have kept the market well above $70 a barrel for most of this month.
Growing U.S. crude production and stockpiles have weighed on the market. "Since the market is already tight because of the high production outages in Venezuela and the production cuts implemented by OPEC and Russian Federation, any further reduction of supply weighs all the more heavily", the bank said.
USA crude inventories likely rose by 1.3 million barrels last week, while gasoline and distillate stockpiles fell, a preliminary Reuters poll showed on Monday ahead of data by the Industry group the American Petroleum Institute later in the day. USA crude stockpiles probably increased by 1.25 million barrels, according to the median estimate of analysts surveyed by Bloomberg.
The 2018 budget proposal, submitted by President Muhammadu Buhari in November 2017, put the benchmark oil price at $45 per barrel, compared to $44.5 per barrel for the 2017 budget. Gains were likely limited by this week's higher than expected USA crude oil and gasoline inventories as well as rising US production.