Oil prices were on Wednesday weighed down by economic growth concerns that dampened the outlook for fuel consumption, but supported by voluntary supply cuts led by producer club OPEC and by U.S. sanctions against Iran and Venezuela.
International Brent crude oil futures were at 67.55 dollars a barrel at 0432 GMT, down six cents, or 0.1 per cent, from their last close. Brent on Tuesday touched its highest since Nov. 16, 2018 at 68.20 dollars a barrel.
U.S. West Texas Intermediate (WTI) crude futures were at 58.92 dollars per barrel, down 11 cents, or 0.2 per cent, from their previous settlement. WTI on Tuesday reached its strongest level since Nov. 12 at 59.57 dollars a barrel.
Analysts said an economic slowdown could soon dent fuel consumption.
“Global growth concerns and ongoing oversupply fears (are) creating headwinds for the commodity,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Asian business confidence held near three-year lows in the first quarter as a U.S.-China trade dispute dragged on, pulling down a global economy that is already on a downward path, a Thomson Reuters/INSEAD survey found on Wednesday.
The dips come after crude prices rose by more than a quarter this year, pushed up by a pledge led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold around 1.2 million barrels per day (bpd) of supply as well as by U.S. sanctions against oil exporters Iran and Venezuela.
“The shaky supply outlook with regard to Venezuela and Iran, as well as the petro-nations’ output restrictions are top of mind in the oil market,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer.
Ruecker said oil prices were likely capped around 70 dollars per barrel as fuel price inflation, as seen last year, would hit demand at that level.
At the same time, he said oil prices were supported above 50 dollars per barrel as investment into U.S. shale output growth would cease below that price.
Between those price levels, Ruecker said “the U.S. shale boom almost fully meets global oil demand growth mirrored by the strongly expanding crude oil exports,” which hit a record 3.6 million bpd in February.
“We see … roughly 1.2 million bpd of U.S. shale oil growth over the coming year,” Ruecker said, which is in line with most global oil demand growth forecasts of 1 million to 1.3 million barrels per day for 2019.
The U.S. Energy Information Administration is due to publish its weekly crude production and storage level report around 1700 GMT on Wednesday.