Oil prices sank below recent 2019 highs as US government data overnight showed a sharp build in crude stocks and record production, while concerns about slowing global economic growth weighed on the market.
Supply cuts led by the Organisation of the Petroleum Exporting Countries and its allies, including Russia, and oil sanctions on Venezuela and Iran helped to limit losses.
Progress in US-China talks to resolve a trade dispute that has dampened global economic growth also supported prices.
US West Texas Intermediate (WTI) crude oil futures fell 20 US cents to settle at $US56.96 a barrel after touching a 2019 high of $US57.55 the previous day.
Brent crude futures fell 1 US cent to settle at $US67.07 after hitting a 2019 peak on Wednesday at $US67.38.
US crude oil stockpiles rose for a fifth straight week to the highest in more than a year, as production hit a record high and seasonal maintenance kept refining rates low last week, the Energy Information Administration said.
US crude stocks rose 3.7 million barrels in the week to February 15, to 454.5 million barrels, the highest since October 2017, even as crude exports surged 1.2 million barrels per day to a record 3.6 million bpd.
Crude inventories at Cushing, Oklahoma, the delivery site for US crude futures, accounted for 3.4 million barrels of the rise.
‘The overall headline number on inventories were higher than expected, and most of that build though was coming from Cushing, Oklahoma,’ said Phil Flynn, an analyst at Price Futures Group in Chicago.
‘In fact, if it weren’t for Cushing, Oklahoma, it would be a modest build in line with expectation.’
Production in the United States, which last year became the world’s top crude producer, rose to record high at 12 million bpd.
Still, tightening supply globally helped keep losses at bay.
Oil prices have been driven up this year after OPEC and producer allies, known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing.
Nigeria said on Wednesday it was prepared to reduce its oil output after supplies from the OPEC member rose in January.
US sanctions on Venezuela and Iran have hit crude exports while unrest has curbed Libyan output, further tightening supply.
The US and China have started to outline commitments in principle on the stickiest points in their trade tariff dispute, sources familiar with the negotiations told Reuters.
Analysts said that ongoing signs of a global economic slowdown were also preventing prices from surging beyond highs reached earlier this week.