Oil increased one percent on Tuesday amid supply cuts led by producer club OPEC and Russia, although a darkening economic outlook capped gains.
International Brent crude oil futures were at $59.64 per barrel at 0257 GMT, up 65 cents, or 1.1 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $51.09 per barrel, up 58 cents, or 1.2 percent.
“The impact of OPEC+ (OPEC and others including Russia) cuts, Iran sanctions and lower month-on-month growth in U.S. production should help to support oil prices from current levels,” U.S. bank J.P. Morgan said in a note.
The Middle East-dominated producer club of the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, agreed in late 2018 to cut supply to rein in a global glut.
Meanwhile, the United States last November re-imposed sanctions against Iran’s oil exports. Although Washington granted sanctions waivers to Iran’s biggest oil customers, mostly in Asia, the Middle Eastern country’s exports have plummeted since.
“Iranian exports have already fallen sharply and are likely to remain at around 1.3 million barrels per day (bpd) in 2019, 1.3 million bpd down vs their 1H18 average,” HSBC said in its 2019 oil market outlook.
While OPEC and Russia cut supply and Iran is restrained by sanctions, crude oil production in the United States hit a record 11.7 million bpd late last year.
The surging output increasingly allows U.S. oil producers to export crude, including to top importer China.
Three cargoes of U.S. crude are currently heading to China from the U.S.
Gulf Coast, the first departures since late September and a 90-day pause in the two countries’ trade war that began last month.
The tankers are scheduled to arrive at Chinese ports between late January and early March, according to shipbrokers and vessel tracking data.
Looming over oil and financial markets, however, is an economic slowdown.
Tuesday’s oil price increases came after crude futures fell by more than 2 percent the previous session, dragged down by weak Chinese trade data which pointed to a global economic slowdown.
“The outlook for the global economy continues to be highly uncertain,” HSBC said.
The bank said it had cut its average 2019 Brent crude oil price forecast by $16 per barrel, to $64 per barrel, citing surging U.S. production and an “increasingly uncertain demand backdrop”.