Oil prices edged higher overnight, supported by OPEC-led supply cuts and US sanctions against exporters Venezuela and Iran, but gains were capped by falling stock markets and renewed concerns over demand growth.
Brent crude futures gained 31 US cents, or 0.47 per cent, to settle at $US66.30 a barrel.
US West Texas Intermediate (WTI) crude futures rose 44 US cents, or 0.78 per cent, to settle at $US56.66 a barrel.
‘The big picture is that short-term fundamentals are very strong,’ said Phil Flynn, analyst at Price Futures Group in Chicago.
‘There’s still some nervousness about supply.’
The Organisation of the Petroleum Exporting Countries and allies such as Russia this year have aimed to cut output and tighten oil markets, which has supported prices.
US sanctions against the oil industries of OPEC members Iran and Venezuela have also supported futures, traders said.
Venezuela’s state-run oil company PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil due to sanctions.
When the United States reimposed sanctions against Iran in November, the US granted waivers to eight Iranian oil buyers, allowing them to buy limited amounts of crude for another 180 days.
The US has put pressure on these governments to gradually cut their imports of Iranian oil to zero, but importers remain in talks over potential extensions.
India wants to keep buying Iranian oil at its current level of about 300,000 barrels per day (bpd), as it negotiates with the US about extending a sanctions waiver past early May, two sources in India said.
Signs of strong demand for refined products from US Energy Information Administration data on Wednesday also buoyed prices.
However, prices were pressured by concerns surrounding Europe’s economy, which pushed Wall Street lower and fuelled worries about global oil demand.
To stimulate a struggling euro zone economy, the European Central Bank pushed out the timing of its first post-crisis rate hike to next year at the earliest and offered banks new rounds of multi-year cash.
‘Mounting global oil demand concerns related to slowing world economic growth remains as a latent bearish consideration that will likely provide a limiter on near term upside progress,’ Jim Ritterbusch, president of Ritterbusch and Associates, said in a note
Further, oil remains in plentiful supply thanks to surging US production, which was at a record 12.1 million bpd last week.
Elsewhere, Libya’s El Sharara oilfield is pumping 135,000 barrels a day with output rising, state oil firm NOC said.