US crude stockpiles shoot up, but oil prices stay near 2019 highs

Oil prices hovered around 2019 highs on Thursday, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran, but were capped by slowing growth in the global economy.

Prices were little changed after government data showed U.S. crude stockpiles rose last week as refineries cut output and weekly American oil production rose to 12 million barrels a day.

Crude inventories rose by 3.7 million barrels in the week to Feb. 15, the U.S. Energy Information Administration said, compared with analysts' expectations for an increase of 3.1 million barrels. Crude stocks at the closely watch delivery hub at Cushing, Oklahoma rose by 3.4 million barrels, EIA said.

U.S. West Texas Intermediate crude oil futures were at $56.78 a barrel around 12:25 p.m. ET (1725 GMT), 38 cents below their last settlement. WTI hit a fresh 2019 high of $57.61 earlier in the day.

Brent crude futures fell by 27 cents to $66.81 after touching a 2019 peak on Wednesday at $67.38.

Gasoline stocks fell by 1.5 million barrels, compared with analysts' expectations in a Reuters poll for a 350,000-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.5 million barrels, versus expectations for a 1.7 million-barrel drop, the EIA data showed.

Oil prices have been driven up this year by supply cuts led by OPEC.

OPEC and its de facto leader Saudi Arabia agreed late last year, along with producer allies such as Russia, to cut output by 1.2 million barrels per day to prevent a supply overhang from growing.

OPEC member Nigeria signaled on Wednesday that it would limit output after its production climbed in January.

"Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

"Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market."

U.S. sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output.

However, analysts said that a global economic slowdown — signs of which emerged late last year — was preventing prices from surging beyond highs reached this week.

The number of Americans filing applications for unemployment benefits fell last week, but the four-week moving average rose to a more than one-year high, suggesting the labor market was slowing down.

"Slowing economic growth will invariably lead to weakness in fuel consumption, thus eroding bullish gains for oil prices," said Benjamin Lu of brokerage Phillip Futures in Singapore.

Talks between the United States and China to resolve a trade dispute which has helped dent global growth may be progressing, though. The two sides have started to outline commitments in principle on key points of contention, sources familiar with the negotiations told Reuters.

The main factor keeping oil prices from rising even further is soaring U.S. output, which rose by more than 2 million bpd last year to a record 11.9 million bpd.

Weekly figures from EIA showed U.S. production hitting a record at 12 million bpd and crude oil exports rising to an all-time high 3.6 million bpd.

— CNBC's Tom DiChristopher contributed to this report.