Oil prices dipped on Thursday from 2019 highs after data from the US Energy Information Administration showed the fifth weekly build in US crude stocks as well as record high US oil output.  Anadarko photo.

Oil prices fall capped by OPEC cuts

On Thursday, oil prices slipped below 2019 highs after data from the US Energy Information Administration showed a build in crude stockpiles for the fifth straight week as well as record high US oil production.  The market also remains concerned about slowing global economic growth.

But losses in oil prices were capped by the OPEC supply cut agreement as well as US sanctions on Iranian and Venezuelan crude exports.  As well, forward momentum in trade talks between the United States and China also buoyed prices.

By 2:55 p.m., EST, benchmark Brent crude futures were down 1 cent to $67.07 and US West Texas Intermediate futures slipped 19 cents to $56.97/barrel.  In trading on Wednesday, WTI hit a 2019 high of $57.55/barrel and Brent futures topped 2019 at $67.38/barrel.

According to the US Energy Information Administration, US crude stockpiles rose for a fifth straight week to their highest levels in over a year on rising production and seasonal maintenance at refineries.

US oil inventories climbed by 3.7 million barrels last week to 454.5 million barrels, the highest since October 2017.  This despite a rise in crude exports to 1.2 million barrels per day (b/d) to a record high 3.6 million b/d.

“All in all the report is bearish, in particular the strong increases in crude oil stocks,” Cartsen Fritsch, analyst at Commerzbank told Reuters.

Fritsch added that with US production rising to a record high 12 million b/d, market sentiment could be dampened.

However, tightening global supply helped slow losses.

OPEC along with some allies agreed to cut their total production by 1.2 million barrels per day to help cut the global oversupply of crude.  On Wednesday, Nigeria signalled that after its production rose last month, it would now cut its production.

“Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting,” Abhishek Kumar, senior energy analyst at Interfax Energy told Reuters.

“Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market.”

The Trump administration’s sanctions on Venezuelan and Iranian crude exports have cut into the market supply while unrest in Libya has impacted its oil industry.

Trade talks between the United States and China are ongoing and have helped to boost oil prices.  A Reuters’ source says both sides have begun outlining commitments in principle on key points of contention.

Despite the optimism over the trade talks, analysts remain concerned that a possible global economic slowdown is keeping prices from surging beyond highs reached this week.