LONDON: Oil edged lower on Thursday but held near 2019 highs, supported by a sharp tightening of global stocks, OPEC production cuts and US sanctions on key producers Iran and Venezuela.
International Brent crude oil futures were down $0.3 at $68.30 a barrel by 1102 GMT, having hit their highest since November 13 at $68.69 earlier in the session.
US West Texas Intermediate (WTI) crude futures were at $59.95 per barrel, down $0.28. WTI reached its highest since November 12 earlier in the day, at $60.33 per barrel.
Oil prices rise to 2019 highs on OPEC cuts, US sanctions
Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) as well as sanctions against Iran and Venezuela by the United States.
The drop in production has led to a tightening of global inventories. Vienna-based consultancy JBC Energy estimated stocks had run down by a "solid" 40 million barrels since mid-January.
That followed a 10-million-barrel fall in US crude stocks last week, the largest drop since July, due to strong export and refining demand, according to the US government's Energy Information Administration
The rapid decline in inventories comes despite many refineries undergoing seasonal maintenance work ahead of peak summer demand.
However, global trade tensions remain a worry. "Why are oil prices not rallying through the roof? We suspect the sword of Damocles hanging over the market is currently called US-China trade talks," Tamas Varga, analyst at brokerage PVM said in a note. "Cautious bulls will become unreservedly bullish if or when an agreement is struck."
OPEC's crude output fell from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February.
Oil retreats from 2019 high on soaring production
US sanctions are disrupting supply. "Venezuelan exports to the US have finally dried up, after the sanctions were placed on them by the US administration earlier this year," ANZ bank said.
Iranian oil shipments have slumped. The US aims to cut Iran's crude exports by about 20% to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid US sanctions.
OPEC cuts and sanctions have also tightened supply within the US. Part of the drawdown in US inventories was due to surging exports, which stood at a four-week average of 3 million bpd, double the amount this time a year ago, the EIA said.
US crude oil production returned to its record of 12.1 million bpd last week, making America the world's biggest producer ahead of Russia and Saudi Arabia.