The price of oil is hovering at a four-and-a-half month high amid concerns over disruption to supplies from the Middle East.
Brent crude oil is at $65.37 per barrel and has gained around $9 since March.
A slowdown in US shale oil production and the conflict in Yemen have been cited as the main reasons for the rise in the oil price in recent weeks.
It comes as BP, Shell and Exxon Mobil are expected to report sharp falls in first quarter earnings this week.
Michael Hewson, chief market analyst at CMC Markets, said: “Overall we are in an upwards trend and we do appear to have found a short-term base. There’s a good chance we could see $70 a barrel [for Brent] over the course of the next month or so.”
While Yemen itself is not among the biggest oil producers in the Middle East, Gulf producers ship oil along the Gulf of Aden on Yemen’s southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti.
As a result fighting in the region could create log jams in delivery.
‘Cautious view’
Over the next few days the oil majors BP, Shell and Exxon are set to report results and city analysts are forecasting falls of more than 60% in profits, compared with the same three month period a year earlier.
That comes as a direct result of falling oil prices, which were more than 50% lower in the first three months of 2015 compared with the same time last year.
All seven major global oil firms are forecast to report a year-on-year decline in income of around 57%, according to analysts at Jefferies.
Analysts at Barclays bank cautioned against undue optimism over oil prices, which are still $50 per barrel below their previous high of $115 per barrel last August.
“Sustaining the recent oil price rally requires firmer demand and a tangible supply response,” they said in a note.
“The cart is moving ahead of the horse, and we take a cautious view on further price appreciation over the near term.”
BP backing
Separately, UK government officials warned off any potential suitor for BP ahead of the release of its first quarter results on Tuesday.
A senior City source was quoted by the Financial Times newspaper as saying the government “would make their opposition so clear that any foreign bidder would be deterred from actually making a bid.”
A poor set of results might make BP vulnerable to a takeover from one of its rivals. But the final bill for the Gulf of Mexico oil spill off the US coast in 2010 and the firm’s exposure to Russia through its Rosneft business could deter would-be suitors.
Earlier this month Royal Dutch Shell and BG Group announced a £47bn merger. Should it receive regulatory approval the deal would be one of the biggest of 2015 and could produce a company with a value of more than £200bn.
Source: BBC
