Oil prices edged higher on Tuesday as OPEC-led efforts to tighten supply offset the restart of Libya’s biggest oilfield and the prospect of weaker demand.
Supply curbs by OPEC and its allies have helped to drive oil prices more than 20 percent higher this year. Russia plans to speed up its output cuts this month, the energy minister said on Monday.
Brent crude, the international benchmark, rose 17 cents to $65.84 a barrel around 8:02 a.m. ET (1302 GMT), rallying from a session low of $65.04.
U.S. West Texas Intermediate crude were up 17 cents at $56.76, after dropping as low as $56.09.
To prop up the market, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million barrels bpd since the start of the year.
The actual cut has exceeded the pledged amount because of U.S. sanctions on Iran and Venezuela, plus unrest in Libya that had prompted the closure of El Sharara, giving additional tailwind to prices.
OPEC is likely to achieve its goal of draining oversupply from the market by next month, Jeff Currie, global head of commodities research at Goldman Sachs, told CNBC on Monday.
“It appears that Saudi Arabia and Russia would be happy with crude oil prices of between $60 and $70 for the rest of this year,” said Ole Hansen of Saxo Bank.
A Brent price of $70, he added, “can be reached quite soon,” citing OPEC cuts, U.S. energy sanctions, and slowing U.S shale oil production growth.
Putting a dampener on the market was the restart of Libya’s El Sharara oilfield, where the aim is to reach initial output of 80,000 barrels per day. The field had been closed since December.
“This will increase the oil production of Libya, and thus of OPEC, by more than 300,000 barrels per day,” said Commerzbank in a report. “The oil market will then be slightly oversupplied again unless production is cut further or unscheduled outages occur elsewhere.”
Oil also slipped earlier on forecasts that the latest round of U.S. inventory reports will show rising crude stockpiles. Six analysts polled by Reuters estimated, on average, that crude stocks rose 400,000 barrels in the week to March 1.
The first supply report is due at 4:30 p.m. ET (2130 GMT) from the American Petroleum Institute (API), an industry group, followed by the government’s official figures on Wednesday.
Concern about a slowdown in oil demand growth, especially in Europe and Asia, has weighed on prices.
China’s government said it is targeting economic growth of 6.0 to 6.5 percent in 2019, less than 6.6 percent growth reported last year. That raises the prospect of slowing fuel demand in the world’s second-largest consumer.
“There are plenty of signs that the global economy is slowing — weak car sales and manufacturing data from China, flat growth in Europe, and a slowing GDP rate in the fourth quarter for the U.S.,” said Matt Stanley, a broker at Starfuels in Dubai.