Oil prices settled lower despite unexpected drop in the US crude inventories, after trading higher earlier in the day.
Ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and the US sanctions on Venezuela and Iran restricted the prices from further falling.
Brent crude futures dropped 19 cents to $71.43 a barrel, while US West Texas Intermediate (WTI) crude futures fell 14 cents to settle at $63.62 per barrel, reported Reuters.
US crude inventories slipped by 1.4 million barrels last week, according to Department of Energy (DoE) data. This is against market expectations of a 1.7 million barrel increase. Gasoline stocks also fell by 1.2 million barrels.
Data released by Energy Information Administration (EIA) showed that distillate stockpiles dropped by 362,000 barrels, significantly below the anticipated drop of 846,000 barrels.
Global oil prices propped up in 2019 with support from supply cuts led by OPEC and its allies. The participating nations reduced their combined oil output by 1.2 million barrels per day (Mbpd).
Oil supplies were further squeezed due to US sanctions on key petroleum producers Venezuela and Iran.
Industry sources told Reuters that crude exports from Iran have dropped to their lowest in April. However, rising oil production in the US and ongoing US-China trade war have restricted the crude prices from further gaining.
Interfax Energy analytics head Abhishek Kumar was quoted by Reuters as saying: “A persistent rise in US oil output, together with lingering demand-side concerns emerging from the US-China trade dispute, is limiting price gains.”
Earlier this week, the US EIA stated that crude output from seven major shale formations will increase by nearly 80,000 bpd next month to 8.46 Mbpd.