Oil prices rose to fresh 5-month highs on Tuesday as markets tightened amid OPEC-led supply cuts, U.S. sanctions against Iran and Venezuela, and escalating violence in Libya.
International benchmark Brent futures hit their strongest level since last November at $71.34 per barrel, before easing to $71.18 per barrel by 0452 GMT, still 8 cents, or 0.1 percent, above their last close, as reported by Reuters.
U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.53, up 13 cents, or 0.2 percent.
Oil markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of the Organization of the Petroleum Exporting Countries (OPEC) has been withholding supply to prop up prices.
Brent and WTI futures have risen by 40 percent and 30 percent respectively since the start of the year.
Goldman Sachs said an oil supply deficit had opened up early this year.
"We expect the drivers of this deficit to persist through 2Q19" due to a "shock and awe implementation of the OPEC cuts ... further tightening of U.S. oil sanctions and an only moderate increase in shale production for now," the U.S. bank said in a note.
Goldman said it expected Brent to average $72.50 per barrel during the second quarter, up from a previous forecast of $65 per barrel.
Prices have been further lifted this week by escalating violence in Libya, a significant supplier of oil to Europe, which produced around 1.1 million barrels per day (bpd) of crude in March.
Eastern forces on Monday were advancing on the Libyan capital Tripoli in the latest of a cycle of warfare since Muammar Gaddafi's fall in 2011, with a warplane attacking the city's only functioning airport.
Yet despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude prices from rising even higher, traders said.
And while fears of a global recession ebbed following strong U.S. jobs figures and improved Chinese manufacturing data late last week, Bank of America Merrill Lynch said there was still a "significant slowing in growth globally" in 2019.
The bank said it expected Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.
Goldman Sachs also said oil prices "will decline gradually from this summer as shale and OPEC production increases."
Russia, not an OPEC-member but a reluctant participant in the supply cuts, signaled on Monday it wanted to raise output when it meets with OPEC in June because of falling stockpiles.
In the United States, crude oil production has risen by more than 2 million bpd since early 2018, to a record 12.2 million bpd, with many analysts expecting output to exceed 13 million bpd soon.