Oil edges higher amid tightening global supply, gains capped by economic slowdown


WTI Crude oil has been rallying for the past five consecutive weeks pushing oil prices to a five-month high.

Supply cuts by OPEC and allies, and the USA sanctions on China and Venezuela supported oil prices.

Global benchmark Brent crude was trading at $70.81 per barrel at 0637 GMT with a 0.28% increase after it ended Tuesday at $70.61 a barrel.

U.S. West Texas Intermediate (WTI) crude oil futures were at $64.10 per barrel, up 12 cents, or 0.2 percent, above their last settlement.

On Tuesday, the 9th of April 2019, during the midday Asia Pacific trading hours, Brent crude hit a five-month high above $71, while USA crude had resurfaced over $64.50 level for the first time after November 1st, 2018.

Oil prices raced on Wednesday to five-month highs hit the previous day as the Organisation of Petroleum Exporting Countries (OPEC) production cuts and United States (U.S.) sanctions on Iran and Venezuela continued to tighten supply, though economic worries increased.

"OPEC production has fallen 1.98 million barrels per day (bpd) from October levels", ING bank said in a note.

"Declines from these two exempt countries account for nearly 47% of the reduction seen from OPEC", ING added.

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Russia, not an OPEC-member but a reluctant participant in the supply cuts, signalled yesterday it wanted to raise output when it meets with OPEC in June because of falling stockpiles.

The OPEC monthly report released on Wednesday showed that Venezuela's oil output sank last month to a long-term low below 1 million barrels per day, due to USA sanctions and blackouts.

Venezuela's oil production is also forecast to decrease to 750,000 bpd this year, from 1.31 million bpd last year, according to the report.

US crude stocks rose by 4.1 million barrels in the week to April 5, to 455.8 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.

"WTI has not seen the same strength (as Brent). given the relatively more bearish fundamentals in the USA market", said ING bank.

Oil prices rose on Wednesday after USA data showing a hefty drawdown in gasoline stockpiles overshadowed crude inventories rising to their highest levels in more than a year.

In its third downgrade since October, the International Monetary Fund said the global economy will likely grow 3.3 percent this year, the slowest expansion since 2016.