Oil held near 2019 highs on Thursday, supported by tightening U.S. stocks and declining output from key producers due to OPEC production cuts and U.S. sanctions on Iran and Venezuela.
International Brent crude oil futures were up 5 cents at US$68.55 a barrel, having hit their highest since Nov. 13 at US$68.69 earlier in the session.
U.S. West Texas Intermediate (WTI) crude futures were at US$60.10 per barrel, down 13 cents. WTI reached its highest since Nov. 12 earlier in the day, at US$60.33 per barrel.
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 sanctions enacted against Iran and Venezuela by the United States.
The drop in production has led to a tightening in global inventories. Vienna-based 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 last July, boosted by strong export and refining demand, according to the U.S. government’s Energy Information Administration.
Meanwhile, OPEC’s crude output slumped from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February. The 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.
Part of the drawdown in U.S. inventories was due to surging exports, which stood at a four-week average of 3 million bpd, double the amount this time a year ago, the EIA said.
U.S. crude oil production returned to its record of 12.1 million bpd last week, making America the world’s biggest producer ahead of Russia and Saudi Arabia.