Oil edged lower on Thursday but held near 2019 highs, supported by a tightening of global stocks, OPEC production cuts and U.S. sanctions on key producers Iran and Venezuela.
Brent crude futures were down 24 cents at $68.26 a barrel by 1102 GMT, having hit their highest since Nov. 13 at $68.69 earlier in the session.
U.S. West Texas Intermediate (WTI) crude futures were at $60.01 per barrel, down 13 cents. WTI reached its highest since Nov. 12 earlier in the day, at $60.33.
Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by the Organization of the Petroleum Exporting Countries, as well as U.S. sanctions against Iran and Venezuela.
The drop in production has led to a tightening in global inventories. Consultancy JBC Energy estimated stocks had run down by a “solid” 40 million barrels since mid-January.
That followed a 10-million-barrel fall in U.S. crude stocks last week, the largest drop since July, due to strong export and refining demand, according to the U.S. government’s Energy Information Administration (EIA).
The decline in inventories comes despite seasonal maintenance at many refineries.
However, global trade tensions remain a worry.
“Why are oil prices not rallying through the roof? We suspect the sword of Damocles hanging over the market is currently called U.S.-Chinese trade talks,” Tamas Varga, analyst at brokerage PVM, said in a note.
OPEC will likely decide to extend its production-cutting deal with Russia at the organisation’s next meeting in June, RBC Capital Markets said in a note.
“With the driver of the OPEC bus, Saudi Arabia, showing no signs of wavering in the face of renewed pressure from Washington, we believe that OPEC is likely to extend the deal for the duration of 2019,” RBC said.
OPEC’s crude output PRODN-TOTAL fell from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February.
U.S. sanctions are disrupting supply.
“Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the U.S. administration earlier this year,” ANZ bank said.
Iranian oil shipments have slumped. The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.
The OPEC cuts and sanctions have also tightened supply within the United States.
U.S. crude production C-OUT-T-EIA returned to its record of 12.1 million bpd last week, making America the world’s biggest producer.