Oil rose to around $66 a barrel on Tuesday as the market balanced OPEC-led efforts to tighten supply with the restart of Libya’s biggest oilfield and the prospect of weaker demand.
Supply curbs by the Organization of the Petroleum Exporting Countries and allies have helped to drive a 20 percent gain for Brent crude this year. Russia plans to speed up its output cuts this month, the energy minister said on Monday.
Brent, the international benchmark, rose 41 cents to $66.08 a barrel as of 1406 GMT. U.S. West Texas Intermediate crude added 25 cents to $56.84.
“It appears that Saudi Arabia and Russia would be happy with crude oil prices of between $60 and $70 for the rest of this year,” said Ole Hansen of Saxo Bank.
A Brent price of $70, he added, “can be reached quite soon,” citing OPEC cuts, U.S. sanctions against OPEC members Iran and Venezuela, and slowing U.S shale oil production growth.
Putting a dampener on the market was the restart of Libya’s El Sharara oilfield, where the aim is to reach initial output of 80,000 barrels per day. The field had been closed since December.
“This will increase the oil production of Libya, and thus of OPEC, by more than 300,000 barrels per day,” said Commerzbank in a report. “The oil market will then be slightly oversupplied again unless production is cut further or unscheduled outages occur elsewhere.”
Expectations that the latest round of U.S. inventory reports will show rising crude stockpiles also limited the upside. Six analysts polled by Reuters estimated, on average, that crude stocks rose 400,000 barrels in the week to March 1.
The first supply report is due at 2130 GMT from the American Petroleum Institute (API), an industry group, followed by the government’s official figures on Wednesday.
Concern about a slowdown in oil demand growth has weighed on prices.
China’s government said it is targeting economic growth of 6.0 to 6.5 percent in 2019, lower than the 6.6 percent growth reported last year and raising the prospect of slowing fuel demand.
To support prices, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million barrels bpd since the start of the year.
The actual cut has exceeded the pledged amount because of the sanctions on Iran and Venezuela, plus unrest in Libya that had prompted the closure of El Sharara, giving an additional tailwind to prices.
