Oil rose for a fifth day overnight, on track for its strongest first quarter in eight years, thanks to a growing belief among investors that OPEC’s supply cuts will prevent a build-up in unused fuel, though concern over China’s economy tempered gains.

Brent futures were last up 16 US cents at $US66.41 a barrel, having touched a 2019 high of $US66.83 earlier in the day, while US futures rose 47 US cents to $US56.04 a barrel.

Oil has risen nearly 25 per cent so far this year and is on course for its strongest first-quarter performance since 2011, thanks largely to a commitment by the Organisation of the Petroleum Exporting Countries and allies to cut output.

‘Our numbers… do tell us that we are looking at the tightest H1 crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being,’ consultancy JBC Energy said in a note.

Refiners around the world are also having to pay more to secure supplies of the medium or heavy sour crudes produced by Iran and Venezuela, both of which are under US sanctions.

The broader financial markets eased a little after data showing a drop in Chinese car sales in January raised concerns about the world’s second-largest economy.

Some of this weakness rubbed off on the oil market, but analysts said the overall trend in crude prices remained convincingly upwards for now.

‘There are lots of ‘ifs’ and ‘buts’ that could have a profound impact on oil prices; just think of the unpredictable Donald Trump, Brexit, trade talks or an eventual pick-up in Libyan and/or Venezuelan production,’ said PVM Oil Associates analyst Tamas Varga.

‘Latest available data, however, point in the direction of a tightening market. It is not recommended to swim against the current and presently the ‘oil’ river is flowing north.’

Some analysts said the continued rise in US oil production could act as a drag on the current rally.

US energy companies last week increased the number of oil rigs looking for new supply by three to a total of 857, energy services firm Baker Hughes said in a report last Friday.

‘We view the current price rise as exaggerated and see growing correction potential,’ Commerzbank said in a note.

‘The fact that oil production in the US is currently rising significantly more sharply than previously expected is being completely ignored at present.’