Oil up as sanctions against Venezuela, Iran bite

US benchmark West Texas Intermediate (WTI) crude oil futures were up 28 cents, or 0.5 per cent, at $52.69 per barrel at 0751 GMT, from their previous close.

International Brent crude futures were up 38 cents, or 0.6 percent, at $61.89 per barrel.

The ongoing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped prop up WTI, traders said.

However, a slowdown in US shale drilling activity in response to low oil prices could push up oil prices again. 

According to Standard Chartered analysts perceptions of US supply growth will be the key driver of oil market sentiment in 2019.

The investment bank expects non-Opec supply growth to slow to just 1.518 million barrels per day (mb/d) this year and 0.754 mb/d in 2020, notably down from 2.46 mb/d in 2017 (figures include NGLs and biofuels). The US is the major driver of this growth.

Analysts said markets are tightening amid voluntary production cuts led by Opec and because of US sanctions on Venezuela and Iran.

But some said supply-side risks were not receiving enough focus.

Growing US supply and a potential economic slowdown this year could also cap oil markets.

Traders are bracing for increasing supplies at Cushing, Oklahoma, the delivery point for benchmark US crude futures, as refinery outages could create a supply backlog that will add to inventories that are already at the highest in more than a year.

US bank Morgan Stanley said the surge in US crude oil production, which rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd, had resulted in overproduction of gasoline.

Bank of America also warned of "a significant slowing in growth globally", adding that it expected Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.