Oil futures were trading near 2016 highs on Wednesday, as supply disruptions and output cuts continued to tighten the market, although traders cautioned that high global crude inventories were still weighing on prices.
International Brent crude futures LCOc1 were trading at $49.36 per barrel at 0644 GMT, 8 cents above their last settlement. U.S. West Texas Intermediate (WTI) crude futures CLc1 were 11 cents higher at $48.42 a barrel.
Both contracts remained near their 2016 highs of $49.75 and $48.76 per barrel respectively, hit during intra-day trading the previous day.
“With oil continuing to suffer from supply disruptions … EIA inventory data will be key to price action. Any further decline in stockpiles could see oil’s run higher continue,” ANZ bank said.
The U.S. Energy Information Administration (EIA) is scheduled to release official storage data on Wednesday.
“With (Canadian) wildfires shifting back toward oil sands operations, the risk of supply disruptions extending into June has increased substantially. Combined with further falls in exports from Nigeria, the physical market is particularly tight,” ANZ added.
Saudi Arabia’s crude oil exports in March fell to 7.541 million barrels per day (bpd) from 7.553 million bpd in February, official data showed on Wednesday.
The oil industry is also keeping an eye on Venezuela, where economic and political turmoil is threatening crude production.
“Supply outages, when set alongside concerns over Venezuelan supply (due to insufficient funds to pay oil companies or spend on the maintenance of loading terminals), represents a significant amount of oil lost in the short-term, which in turn is reflected in firm time spreads at the front of the curve,” BNP Paribas said.
Despite the disruptions, analysts said that global markets remained slightly oversupplied.
“World oil production is now about 96 million barrels a day, and is oversupplied by approximately 1 million barrels a day,” said Ralph Leszczynski of ship broker Banchero Costa.
BNP Paribas said that there was also a large storage overhang that would have to be reduced before the market could swing back into balance.
The bank even said that global crude inventories were still edging up despite the supply disruptions, implying that there is still more oil being produced than consumed.