Oil prices climbed on Friday as markets tightened amid output cuts by producer club OPEC, but surging US supply and concerns of global economic slowdown kept a lid on further gains.
International Brent crude futures were at $66.85 per barrel at 0750 GMT, up 54 cents, or 0.81 per cent, from their last settlement.
US West Texas Intermediate (WTI) crude oil futures were at $57.66 per barrel, up 44 cents, or 0.77 per cent.
Traders said oil markets were currently tightening.
In Venezuela, oil exports have plunged by 40 per cent to around 920,000 barrels per day (bpd) since the US government slapped sanctions against its petroleum industry on January 28.
This drop comes as the Organization of the Petroleum Exporting Countries (OPEC), of which Venezuela is a founding member, has led efforts since the start of the year to withhold around 1.2 million bpd of supply to prop up prices.
“Global (oil) markets appear tighter than many anticipated for this time of year, but scores of unsold barrels can pile up quickly and saturate regions,” Canada’s RBC Capital Markets said in a research note on oil markets.
Despite this, there are signs that point to a more amply supplied market heading further into 2019.
The US Energy Department said on Thursday it was offering up to 6 million barrels of crude from national emergency reserves to raise funds to modernise the US strategic oil reserves.
On the demand side, a Reuters poll showed analysts expect global fuel demand to slow this year amid a broad economic slowdown.
“Persistent economic weakness ... will prevent exponential gains in crude oil futures amidst existing bearish pressures on global petroleum demand,” Benjamin Lu, commodities analyst at Phillip Futures, said on Friday.
China’s February factory activity fell for a third month as the world’s second-largest economy continued to struggle with weak export orders, a private survey showed on Friday, according to Reuters news agency.
The weakness is being felt across the region. South Korea’s exports contracted at their steepest pace in nearly three years in February as demand from its major market China cooled further in yet another sign of faltering momentum in Asia’s fourth-largest economy.
Despite this, fuel consumption especially in Asia’s developing economies, which are key drivers of global oil demand, is so far holding up.
India’s diesel consumption, for instance, is expected to rise to a record this year amid a strong expansion of its heavy duty vehicles amid economic growth of around 7 per cent.