Brent crude futures rose to US$66.40 a barrel by 0321 GMT,
and WTI traded at US$63.13 a barrel. Both benchmarks settled 2% higher on
Wednesday at their highest levels since April 3 and are on track for their
first weekly rise in three. Thursday is the last settlement day of the week
ahead of the Good Friday and Easter holidays
"I think the rally has a couple of factors behind it -
shorts covering, the weaker Greenback which makes crude oil cheaper to buy, and
the US pressure on Iran," IG market analyst Tony Sycamore said.
He added that WTI could rise back to US$67 a barrel but may
struggle with further gains.
"If we assume that US growth is going to be flat at
best for the next two quarters and Chinese GDP is set to slow to somewhere
between the 3%-4% band, it's not good for crude oil," Sycamore said.
President
Donald Trump's administration issued new sanctions targeting Iran's
oil exports on Wednesday, including against a China-based "teapot"
oil refinery, ramping up pressure on Tehran amid talks on the country's
escalating nuclear program.
Adding to supply concerns, the Organization of the Petroleum
Exporting Countries (OPEC) said on Wednesday it had received updated plans for
Iraq, Kazakhstan and other countries to make further output cuts to
compensate for pumping above quotas.
"These
factors certainly could have affected sentiment – would argue that Iranian
production (is) not significant and that OPEC quotas more often breached than
observed, but both factors fed into the more bullish tone," said Michael
McCarthy, CEO of online investment platform Moomoo.
Big draws on US gasoline and distillates stocks and a
smaller-than-expected gain in weekly crude inventories also bolstered markets,
he said.
"Much
of the recent selling pressure in global crude markets related to fears of an
imminent flood of US oil, but the drop in refining suggests that bottlenecks to
supply may be emerging," McCarthy said.
Still, OPEC, the International Energy Agency and
several banks, including Goldman Sachs and JP Morgan, cut
forecasts on oil prices and demand growth this week as US tariffs and
retaliation from other countries threw global trade into disarray.
