Oil prices steadied on Wednesday after Brent pushed towards a nearly five-month high of $70 a barrel on OPEC-led supply cuts and U.S. sanctions, with gains capped by a surprise increase in American inventories.
Brent futures gained 26 cents to $69.63 by 9:08 a.m. ET (1308 GMT). They earlier reached $69.96 — the highest since Nov. 12, when they last traded above $70.
U.S. West Texas Intermediate crude rose 1 cent to $62.59, having hit $62.99, the highest since Nov. 7.
“The psychologically important $70 a barrel threshold has proved a tough nut to crack for the Brent benchmark over the past few weeks,” PVM oil broker Stephen Brennock said.
“Underpinning this latest bout of upward pricing pressures is the positive afterglow from surveys pointing to another sizeable fall last month in OPEC output. Reduced supplies from the producer group will go a long way to cementing the tighter fundamental backdrop.”
Oil prices have been supported for much of 2019 by efforts by OPEC and allies such as Russia, who have pledged to withhold around 1.2 million barrels per day of supply this year.
Supply from OPEC countries hit a four-year low in March, a Reuters survey found this week.
Oil production from Russia fell to 11.3 million bpd last month, but missed the country’s target under the supply deal.
“We assume that OPEC crude oil production will average 30.1 million bpd in 2019 … down from 31.9 million bpd in 2018,” BNP Paribas said in a note, reducing an earlier forecast for this year by 200,000 bpd.
Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.
Vice President Mike Pence said on Tuesday the United States would continue to pressure Venezuela’s oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.
Venezuela’s state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data, Reuters reported later in the day.
U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said late on Tuesday.
Official numbers from the U.S. Department of Energy are due out later on Wednesday.
“As long as we don’t see a major build with the DoE crude oil inventories, we could see a clean move higher,” said Edward Moya, senior market analyst at OANDA.
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