Oil hovers around six-month high as US stocks rise

Stock data counters fears resulting from OPEC output cuts, US sanctions on Venezuela and Iran

LONDON: Oil prices hovered around six-month highs on Wednesday after data showing rising US stocks countered fears of tight supply resulting from OPEC output cuts and US sanctions on Venezuela and Iran.

US crude stocks rose 6.9 million barrels last week, more than expected, data from the industry group American Petroleum Institute showed on Tuesday. Official stock figures were due at 1430 GMT on Wednesday.

"The focus will return to the micro-picture of US data," Petromatrix's Olivier Jakob said in a note.

The International Energy Agency, a watchdog for oil-consuming countries, said on Tuesday markets are "adequately supplied" and that "global spare production capacity remains at comfortable levels."

Brent crude futures were at $74.45 per barrel at 1216 GMT, down $0.06 from their last close. The benchmark made good on some losses from earlier in the session and is still set for its fifth consecutive weekly gain.

US West Texas Intermediate crude futures were at $66.16 per barrel, down $0.14 - not enough to steer them away from what is set to be their eighth week of gains.

Crude oil prices for spot delivery rallied after the US said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action.

China, Iran's biggest oil customer, has formally complained about the move.

The spot price surge has put the Brent forward curve into steep backwardation, in which prices for later delivery are cheaper than for prompt dispatch.

The US has said it saw Saudi Arabia as a partner to balance oil markets. But some analysts said the market remained fundamentally bullish.

"The factors that could lead to higher prices are overwhelming," said Carsten Fritsch at Commerzbank, adding a push towards $80 a barrel was more likely than a fall below $70.

Signalling no immediate action to counteract missing Iranian barrels, Saudi Energy Minister Khalid al-Falih said on Wednesday that his country's production in May would not vary greatly from previous months.