Oil prices extended gains on Thursday on the prospect of tighter supply after Washington imposed further sanctions to curb Iranian oil trade and as some OPEC producers pledged further output cuts to compensate for pumping above agreed quotas.
Brent crude futures rose 34 cents, or 0.5%, to $66.19 a barrel by 0029 GMT, and U.S. West Texas Intermediate crude was at $62.91 a barrel, up 44 cents, or 0.7%.
Both benchmarks settled 2% higher on Wednesday at their highest levels since April 3 and are on track for their first weekly rise in three. Thursday is the last settlement day of the week ahead of the Good Friday and Easter holidays.
President Donald Trump’s administration issued new sanctions targeting Iran’s oil exports on Wednesday, including against a China-based “teapot” oil refinery, ramping up pressure on Tehran amid talks on the country’s escalating nuclear programme.
Adding to supply concerns, the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday it has received updated plans for Iraq, Kazakhstan and other countries to make further output cuts to compensate for pumping above quotas.
“(These factors) certainly could have affected sentiment – would argue that Iranian production (is) not significant and that OPEC quotas more often breached than observed, but both factors fed into the more bullish tone,” said Michael McCarthy, CEO of online investment platform Moomoo.
Big draws on U.S. gasoline and distillates stocks and a smaller than expected gain in weekly crude inventories also bolstered markets, he said.
“Much of the recent selling pressure in global crude markets related to fears of an imminent flood of U.S. oil, but the drop in refining suggests that bottlenecks to supply may be emerging,” McCarthy said.
Still, OPEC, the International Energy Agency and several banks, including Goldman Sachs and JP Morgan, cut forecasts on oil prices and demand growth this week as U.S. tariffs and retaliation from other countries threw global trade into disarray.
The World Trade Organization said it expected trade in goods to fall by 0.2% this year, down from its expectation in October of a 3.0% expansion.
(Reporting by Florence Tan; Editing by Tom Hogue)