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

Singapore — Oil prices rose on Tuesday, lifted by healthy demand and output cuts led by producer group Opec.

A rally in broader financial markets also supported crude futures, although analysts still warned of risks to the global economy.

US West Texas Intermediate (WTI) crude oil futures were at $56.97 a barrel at 12.54am GMT, up 18c, or 0.3%, from their last settlement.

Brent crude futures were at $66.75 a barrel, up 17c, or 0.3%.

“[Despite economic headwinds], we still see Brent prices averaging $70 a barrel this year and expect WTI to lag, averaging $59 a barrel in 2019,” said Bank of America Merrill Lynch.

It said that was partly due to demand for marine diesel expected from next year as part of new fuel rules from the International Maritime Organisation.

“With diesel yields already maxed out, refiners may need to lift runs in the second half of 2019 to meet rising demand for marine distillates,” it said.

Oil prices have been receiving broad support this year from supply cuts by oil cartel Opec and non-affiliated allies like Russia aimed at tightening markets.

Traders also pointed to the political and economic crisis in Opec-member Venezuela as a driver for oil prices.

Venezuela’s opposition-run congress on Monday declared a “state of alarm” over a five-day power blackout that has crippled the country’s oil exports and left millions of citizens scrambling to find food and water.

Surging US output

Offsetting Opec efforts to tighten the market and disruptions like Venezuela is a surge in US oil supply.

The US will drive global oil supply growth over the next five years, adding another 4-million barrels a day to the country’s already booming output, the International Energy Agency (IEA) said on Monday.

US crude oil output will rise nearly 2.8-million barrels a day, growing to 13.7-million barrels a day in 2024 from an average of just less than 11-million barrels a day in 2018, the agency said, making the US by far the biggest oil producer in the world.

With US production booming, the country needs to import less and is increasingly turning abroad to sell surplus oil.

Reuters