Oil prices rose for a fourth day on Wednesday, pushing Brent towards $70 a barrel as support from OPEC-led supply cuts and USA sanctions overshadowed a report showing an unexpected rise in US inventories.
Brent for June settlement rose 30 cents to $69.67 a barrel on the ICE Futures Europe exchange as of 10:07 a.m.in London, having earlier climbed to $69.96.
Data released by the Energy Information Administration this morning showed that crude inventory in the USA rose 7.24 million barrels in the week ended March 29, against expectations of a drop of over 0.4 million barrels.
Organization of the Petroleum Exporting Countries (OPEC) oil supply sank to a four-year low in March, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group's supply-cutting pact while Venezuelan output fell further due to sanctions and power outages.
Crude Oil is trading in the overbought zone after a series of fundamentals.
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Money managers boosted their net long position in WTI by 29 million barrels and increased the net long position in Brent by 13 million barrels in the week ending March 26, according to data from commodity exchanges compiled by Reuters' John Kemp.
Distillate stockpiles, which include diesel and heating oil, fell 2 million barrels, versus expectations for a drop of 506,000 barrels, the EIA data showed.
The OPEC+ reductions allayed concerns over an American Petroleum Institute report that was said to show a 3 million-barrel increase in USA crude inventories.
Last week, the API reported a surprise build in crude oil of 1.93 million barrels. Russian Federation pledged to gradually cut its oil output by two percent from October's output of 11.4 million bpd, equaling 228,000 bpd. Brent's prompt spread traded at 44 cents in backwardation, a market structure where prices in the near term are stronger than those further out.
Official numbers from the U.S. Department of Energy (DoE) are due out later on Wednesday. Yet by preventing the re-emergence of a supply glut, the group has stoked the ire of President Donald Trump and heightened the risk of legal moves against the cartel in the U.S. Rising prices may also influence White House decision-making on sanctions against cartel-members Iran and Venezuela.
"The noticeable decline in drilling activity since the start of the year also points to less dynamic growth in USA oil production", Commerzbank said.