Oil hovers near 2019 highs amid OPEC cuts

Oil prices hovered around 2019 highs on Thursday, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran, but were capped by slowing growth in the global economy.


FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo

U.S. West Texas Intermediate (WTI) crude oil futures were at $57.14 a barrel at 0955 GMT, 2 cents below their last settlement, and close to a 2019 high of $57.55 reached the previous day.Brent crude futures eased by 14 cents, or 0.2 percent, to $66.94 after touching a 2019 peak on Wednesday at $67.38.Oil prices have been driven up this year by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).OPEC and its de fecto leader Saudi Arabia agreed late last year, along with producer allies such as Russia, to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing.

OPEC member Nigeria signaled on Wednesday that it would limit output after its production climbed in January.“There is a growing confidence that global oil inventories will start depleting soon, mainly due to falling OPEC production,” said PVM Oil Associates analyst Tamas Varga.“This, together with unintended reductions from exempted countries, would take the combined output well below the October 2018 level.”U.S. sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output.

However, analysts said that a global economic slowdown – signs of which emerged late last year – was preventing prices from surging beyond highs reached this week.“Slowing economic growth will invariably lead to weakness in fuel consumption, thus eroding bullish gains for oil prices,” said Benjamin Lu of brokerage Phillip Futures in Singapore.The main factor keeping oil prices from rising even further is soaring U.S. output, which rose by more than 2 million bpd last year to a record 11.9 million bpd.The swelling production has resulted in rising U.S. oil inventories.

U.S., China begin drafting trade deal: sourcesU.S. crude oil stocks rose by 1.3 million barrels to 448.5 million barrels in the week to Feb. 15, according to a weekly report by the American Petroleum Institute on Wednesday.Official oil inventory and production data is due from the U.S. Energy Information Administration (EIA) after 1800 GMT on Thursday.

Sources and photo-credits: Reuters