An oil tanker is seen at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER
An oil tanker is seen at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER

Singapore — Oil prices rose on Friday as markets tightened amid output cuts by producer club Opec, but surging US supply and a global economic slowdown prevented crude from climbing further.

US West Texas Intermediate (WTI) crude oil futures were at $57.41 a barrel at 3.50am GMT, up 19c, or 0.3%, from their last settlement.

International Brent crude futures were at $66.59 a barrel, up 28c, or 0.4%.

Traders said oil markets were currently tightening.

In Venezuela, oil exports have plunged by 40 percent to around 920,000 barrels a day since the US government slapped sanctions against its petroleum industry on January 28.

This drop comes as Opec, of which Venezuela is a founding member, has led efforts since the start of the year to withhold about 1.2-million barrels a day of supply to prop up prices.

“Global [oil] markets appear tighter than many anticipated for this time of year, but scores of unsold barrels can pile up quickly and saturate regions,” Canada’s RBC Capital Markets said in a research note on oil markets.

Despite this, there are signs that point to a more amply supplied market heading further into 2019.

The US energy department said on Thursday it was offering up to 6-million barrels of crude from national emergency reserves to raise funds to modernise the US strategic oil reserves.

Additionally, US crude output has hit a record of more than 12-million barrels a day, pushing exports to an unprecedented 3.6-million barrels a day in February.

Investment bank RBC estimated that oil from the US Gulf of Mexico port of Houston “can economically move anywhere globally when priced at a discount of $1.70 a barrel relative to the waterborne Brent benchmark”.

Crude loading from Houston last traded at $6.60 a barrel over WTI, which still put it at a discount of more than $2.15 a barrel to Brent.

On the demand side, a Reuters poll showed analysts expect global fuel demand to slow this year amid a broad economic slowdown.

China’s February factory activity fell for a third month as the world’s second-largest economy continued to struggle with weak export orders, a private survey showed on Friday.

The weakness is being felt across the region. South Korea’s exports contracted at their steepest pace in nearly three years in February as demand from its major market China cooled further in yet another sign of faltering momentum in Asia's fourth-largest economy.

Despite this, fuel consumption especially in Asia's developing economies, which are key drivers of global oil demand, is so far holding up.

India’s diesel consumption, for instance, is expected to rise to a record this year amid a strong expansion of its heavy duty vehicles amid economic growth of around 7%.