Rising U.S. crude stocks dragged oil lower on Thursday but prices continued to find a floor as OPEC-led cuts and freefalling Venezuelan output tightened global supplies.
International benchmark Brent futures were at $71.38 a barrel at 1350 GMT, down 35 cents from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were down 48 cents at $64.13 per barrel.
U.S. crude inventories surged by 7 million barrels to a 17-month high of 456.6 million barrels last week, the Energy Information Administration said on Wednesday.
U.S. crude oil production remained at a record 12.2 million barrels per day (bpd), making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
For a graphic on U.S. oil production, storage & drilling levels, see – tmsnrt.rs/2HWNIqK
“While U.S. crude stocks built last week, a massive draw on (gasoline) inventories likely buoyed the whole complex,” Vienna-based consultancy JBC Energy said.
U.S. gasoline stocks fell by a whopping 7.7 million barrels, sending U.S. RBOB up 3.5 percent from its close on Wednesday.
Tightening global oil supplies also kept a lid on further price losses.
U.S. sanctions and power outages pushed OPEC member Venezuela’s crude output to a long-term low of 870,000 bpd, the International Energy Agency said on Thursday, even lower than OPEC had reported the day before.
For a graphic on Venezuela Oil Production, see – tmsnrt.rs/2IavKRz
Overall output from the Organization of the Petroleum Exporting Countries, which has agreed with allies to withhold 1.2 million bpd of crude from the market since the start of 2019, fell 550,000 bpd in March to 30.1 million bpd, the IEA said.
The agency, which coordinates the energy policies of developed nations, saw oil stocks in industrialized countries fall in February by 21.7 million barrels, putting inventories 16 million barrels above their five-year average.
Oil markets will remain tight “as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far”, said Ole Hansen, head of commodity strategy at Saxo Bank.
Sources told Reuters that OPEC may raise output from July if Venezuelan and Iranian supplies fall further and prices keep rallying.
OPEC and its allies led by Russia are due to meet in Vienna on June 25-26 to set their policy.
Beyond the short-term outlook for oil markets, a lot of attention is on the future of demand amid the rise of alternative transport fuels.
“We believe global demand has another 10 million bpd of growth, with over half from China,” Bernstein Energy said in a note. Current oil demand stands at around 100 million bpd.