Crude traders who peddle cargoes to refineries worldwide say speculators are on shaky ground as they drive futures markets above $70 a barrel, their highest levels for three-and-a-half years, on concerns about tighter supply from Venezuela and the potential impact of United States sanctions on supply from Iran.
Brent for July settlement rose as much as 99 cents, or 1.3 percent, to $79.22 a barrel on the London-based ICE Futures Europe exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $71.33 a barrel.
"OPEC, as always, stands ready to support oil market stability, together with non-OPEC oil producing nations participating in the Declaration of Cooperation", OPEC said, using its name for the pact on supply curbs.
"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the USA", said Singapore-based brokerage Phillip Futures.
Still, even more cautious analysts admit that the OPEC+ production cut deal has served its objective and global oil supply is a lot tighter than it was just two years ago.
"The expectation that there's going to be a drawdown in crude stocks this week is keeping the market very tight", said Phil Flynn, analyst at Price Futures Group.
Saudi Arabia, OPEC's de-facto leader, last month pumped the least crude since the output-cut deal began in early 2017. Oil reached $78.28 a barrel on Monday, the highest since November 2014, after the OPEC report was published.
Trade group the American Petroleum Institute said crude stockpiles rose almost 5 million barrels, compared with analysts' expectations for a 763,000-barrel draw.
USA crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon. USA oil stockpiles probably fell 1.5 million barrels last week, according to the median estimate of analysts surveyed by Bloomberg. As a result, crude oil is likely to undergo a short-term correction.
According to chief executive at Sun Global Investment Mihir Kapadia, so far 2m barrels of oil previously produced by Iran has been taken off the market.
Even as the short term global supply outlook has become somewhat unsettled, world daily oil consumption is projected this year to increase from 97 million to 98.5 million barrels. Because oil inventory levels have been plummeting.
The general public has starting feeling the pinch in their wallet as the oil prices have now climbed to five-years high and are unlikely to go down anytime soon.
The upcoming restored U.S. limits against OPEC-member Iran and robust demand for oil are what now keeping prices well supported, according to analysts.