Oil nears $70 a barrel

Crude has risen 38 per cent this year on the back of output cuts by Opec+, and helped by US sanctions on Iran and Venezuela

A worker Bibi Heybat Oil Field outside Baku. Crude is continuing its rally. AFP

Oil rallied for a fourth day, rising with other financial markets, as a report the US and China are getting closer to reaching a trade deal overshadowed a bigger than expected jump in American crude stockpiles.

West Texas Intermediate for May delivery gained 28 cents to $62.86 a barrel on the New York Mercantile Exchange as of 10:51am in Singapore after finishing up 1.6 per cent on Tuesday.

Brent for June settlement rose 40 cents to $69.77 a barrel on the London-based ICE Futures Europe exchange after getting to $69.87 earlier. The global benchmark crude’s premium over WTI for the same month widened to $6.87 a barrel.

"The production cuts by Opec+ are providing a nice backdrop here for higher prices and until we see US production reassert itself, the easier move is higher for oil," Edward Moya, senior market analyst at Oanda, told Reuters.

US and Chinese officials have resolved most of their trade issues but are still haggling over enforcement mechanisms, the Financial Times reported. Industry data was said to show American crude stockpiles rose by 3 million barrels last week, three times more than estimated in a Bloomberg survey.

Oil has risen 38 per cent this year on the back of the aggressive output cuts by Opec and its allies, which have been abetted by US sanctions on Iran and Venezuela. A resolution of the trade war between the world’s two largest economies would brighten a wobbly global demand outlook.

“We have been getting simultaneous signals on both the demand side and supply side that the picture is more price-positive than was previously thought,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific in Sydney. “The demand picture is the key driver at the moment.”

Supply from Opec countries hit a four-year low in March, a Reuters survey found earlier this week.

Oil production from Russia fell to 11.3 million barrels per day (bpd) last month, but missed the country's target under the deal.

"We assume that OPEC crude oil production will average 30.1 million bpd in 2019 ... down from 31.9 million bpd in 2018," BNP Paribas said in a note, reducing an earlier forecast for this year by 200,000 bpd.