Oil prices edged back towards five-month highs on Wednesday, supported by ongoing supply cuts by producer club OPEC and US sanctions against oil exporters Iran and Venezuela.
International benchmark Brent futures were at $70.83 per barrel at 0056 GMT, up 22 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $64.26 per barrel, up 28 cents, or 0.3 percent, above their last settlement.
Both benchmarks hit five-month highs on Tuesday, before easing on global growth worries and concerns about a rise in Russian supplies.
Oil markets have been tightened this year by U.S. sanctions on oil exporters Iran and Venezuela, as well as supply cuts by the producer club of the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers, a group known as OPEC+.
As a result, Brent and WTI crude oil futures have risen by around 40 percent and 30 percent respectively since the start of the year.
“The global oil market is clearly moving back towards balance thanks to OPEC+ production cuts. OPEC production has fallen 1.98 million barrels per day (bpd) from October levels,” ING bank said in a note.
The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices.
“Venezuelan oil output is estimated to have fallen from 1.19 million bpd in October to 890,000 bpd in March, whileÂ output from Iran has fallen from 3.33 million bpd to 2.71 million bpd due to sanctions. Declines from these two exempt countries account for almost 47 percent of the reductionÂ seenÂ from OPEC,” ING said.
Despite the OPEC-led cuts, not all regions are in tight supply.
Oil production in the United States has risen by more than 2 million barrels per day since early 2018, to a record 12.2 million bpd.
“WTI has not seen the same strength (as Brent)… given the relatively more bearish fundamentals in the U.S. market,” said ING bank.
“U.S. crude oil inventoriesÂ remain stubbornly high,” it added.
U.S. 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.