Oil prices edged down on Wednesday after US government data showed a surprise build in crude inventories, but futures held near their highest in almost five months as OPEC-led output cuts and sanctions on Iran tightened the supply outlook.
Brent futures settled at $69.31 a barrel, losing 6 cents. Their session high was $69.96, the strongest since Nov. 12, when they traded above $70. US West Texas Intermediate crude settled at $62.46 a barrel, falling 12 cents after briefly hitting $62.99, the highest since Nov. 7. Crude stocks in the United States rose 7.2 million barrels last week, as net imports climbed, production edged higher to a new record and refining rates slowed, the Energy Information Administration said. Analysts had forecast a decrease of 425,000 barrels.
"Crude imports rose and crude exports fell, which translates into considerably higher net imports. Crude oil processing remained lower than usual. Crude oil production increased to a new record level of 12.2 million barrels per day," said Commerzbank analyst Carsten Fritsch. "All of this contributed to the large stock build."
Despite the sharp increase in US crude inventories, market participants said prices were positioned to move up on tightening global supply and signs of demand picking up.
"Those are the issues that have supported the market here," said Bob Yawger, director of futures at Mizuho in New York. "At the end of the day, this market is really bulled up and it wants to trade higher."
Crude oil futures were supported by ongoing efforts by the Organization of the Petroleum Exporting Countries and allies such as Russia, a group known as OPEC+, to reduce oil output by about 1.2 million bpd this year.
Supply from OPEC countries hit a four-year low in March, a Reuters survey found this week.
Oil production from Russia fell to 11.3 million bpd last month, but missed the country's target under the supply deal.
In a signal that supply may tighten more, a US official said on Tuesday that three of eight countries granted waivers by Washington to import oil from Iran had cut such purchases to zero, adding that improved oil market conditions would help reduce Iranian crude exports further.
But despite also being under US sanctions, Venezuela's state-run energy company, PDVSA, kept oil exports near 1 million bpd in March, PDVSA documents and Refinitiv Eikon data showed.
Signs of progress in US-China trade negotiations and positive Chinese and US factory activity data in recent days has also helped market sentiment by easing fears about weakening global oil demand.
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