Oil prices rose to a five-month high on Monday, driven by expectations for tighter global supply from fighting in Libya, OPEC-led cuts and U.S. sanctions against Iran and Venezuela.
International benchmark Brent futures were up 69 cents, or 1%, at $71.03 per barrel. U.S. West Texas Intermediate crude settled up by 2.1% at $64.40 per barrel and hit its highest level since Nov. 1.
Prices extended gains after crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, fell by about 419,000 barrels last week, traders said, citing data from market intelligence firm Genscape.
Investors already were focused on supply during the session as fighting in oil-rich Libya threatened to disrupt exports. Eastern forces were advancing on the country's capital, disregarding global appeals for a truce.
"The violence in Libya is captivating the market," said John Kilduff, a partner at Again Capital in New York. "Given the intense efforts of Saudi Arabia and other countries to restrict output, there is a sense that losing the Libyan oil, again, has the makings of a supply crunch."
To prop up prices, OPEC and allies such as Russia pledged to withhold around 1.2 million barrels per day of supply from the start of this year. The group, led by Saudi Arabia, has exceeded those expectations so far this year.
"OPEC's ongoing supply cuts and U.S. sanctions on Iran and Venezuela have been the major driver of prices throughout this year," said Hussein Sayed, chief market strategist at futures brokerage FXTM.
"However, the latest boost was received from an escalation of fighting in Libya which is threatening further supply disruption," he added.
Strong U.S. jobs data on Friday also still supported markets on Monday.
Despite the factors boosting prices, there are still factors that could bring oil prices down later this year.
Russia is a reluctant participant in its agreement with OPEC, and Kirill Dmitriev, the head of Russia's direct investment fund, said OPEC and its allies should raise output from June. Dmitriev previously said it was too early to pull back from cuts.
Saudi Energy Minister Khalid al-Falih on Monday said it was premature to say whether a consensus existed among OPEC and its allies to extend cuts but a meeting next month would be key.
Russian oil output reached a national record high of 11.16 million bpd last year.
In the United States, crude production reached a global record 12.2 million bpd in late March.
"With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports," said energy consultancy FGE in a note.
There also remain concerns about the health of the global economy, especially should China and the United States fail to resolve their trade dispute soon.
"Global demand has weakened, and existing tariffs on Chinese goods shipments to the U.S. are providing an additional drag," rating agency Moody's said on Monday, although it added that Chinese stimulus measures would likely support growth over 2019.