US crude jumped at the end of last week to its highest level since November 2014. It is supported by OPEC-led production cuts and the possibility of new US sanctions on Iran. The US stocks are holding back price gains.
US President Donald Trump is due to decide whether he will renew or exit the Iranian nuclear deal on May 12 as the European deadline for "reforming" the agreement approaches.
Reports suggest that with the possibility of re-imposing the US sanctions on Iran, the stability of its oil production of 2.6 million barrels per day in April, a high record since the lifting of sanctions, will face the danger.
"Current oil prices include a price premium because of the uncertainties about Iran," Wang Xiao, director of crude research at Gutai Junan Futures, said, "Investors are worried about supplies after Iran took a tough stance in its response to the United States. "
According to Reuters, US crude futures for the West Texas Intermediate rose to $ 69.97 a barrel, up 0.3 percent for the week.
Brent crude was up 74.88 dollars a barrel, or 1.82 percent, from the previous close after touching $ 73.80 earlier in the morning session.
Oil is bolstered by the prospect of a US withdrawal from the nuclear deal with Iran, which is raising concerns about crude supplies from the Middle East. The OPEC-led production cuts are helping to reduce supply in the world.
The total production of the Organization of the Petroleum Exporting Countries (OPEC) fell on the back of the problems in Venezuela and the agreement to cut world production between OPEC and Russia.
OPEC and other producers signed an agreement that came into effect in January 2017 to withhold 1.8 million barrels per day of crude from world markets and end the oversupply.
Russian crude oil production reached 10.97 million barrels per day last month, unchanged from March, where production hit an 11-month high. But it is above the target level under an agreement with other oil producers on production restriction.
OPEC and some outside producers, including Russia, are scheduled to meet in Vienna in June to review the deal.
"The level of the country's commitment to the agreement reached 95.2 percent in April," Russian Energy Minister Alexander Novak said.
He added that Russia is fully committed to balance the oil market and curb the factors that lead to the volatility of production.
Russia agreed to reduce its oil production by 300,000 bpd from 11.247 million bpd in October 2016, which is the base month for cuts in the deal signed with OPEC and other producers.
Rosneft, the largest producer of the listed companies, rose 0.1 percent from March. Gazprom Oil, the fastest-growing Russian oil company, rose 0.9 percent. However, the decline in the production of smaller companies, with a total of 0.9 per cent, wasted the impact of these increases.
Russian crude oil exports in April rose to 4.367 million bpd from 4.163 million bpd in March.
Russian gas production reached 61.86 billion cubic meters last month, 2.06 billion cubic meters per day, from 65.68 billion cubic meters in March.
In contrast, the increasing US oil stocks pressured on the gains of oil contracts. The US Energy Information Administration reported that US crude inventories in the United States rose last week as refineries reduced production, while gasoline stocks increased and distillate stocks fell.
Crude inventories rose by about 2.2 million barrels while it was expected to drop 2 million barrels.
Data showed that crude oil inventories at the delivery center in Cushing, Oklahoma increased by about 459 thousand barrels.
It noted that the consumption of refineries of crude fell by 328 thousand barrels per day with a decline in operating rates 1.6 percentage points.
Gasoline inventories rose 840,000 barrels while analysts surveyed by Reuters had forecast a 625,000 barrel drop.
Distillate stocks, including diesel and heating oil, fell by 2.6 million barrels, while 861,000 barrels were expected to fall.
Net US crude imports from crude fell last week by about 43 thousand barrels per day to 6.14 million barrels per day.
US oil production also hit a record weekly high of 10.62 million barrels per day, which is surpassing the output of Russia, the world's biggest oil producer.
The United States may exceed 11 million barrels per day very soon, as the US oil companies increased production from January to May at the fastest rate in at least five years, according to Thomson Reuters Eikon.
Meanwhile, natural gas inventories in the United States rose for the first time in 2018 last week, by about 62 billion cubic feet to 1343 billion cubic feet in the week ending April 27.
Analysts estimated natural gas stocks to rise by 47 billion cubic feet last week and year on year.
US natural gas inventories fell by 903 billion cubic feet last week compared to the same period last year.
The price of natural gas futures at the end of the week fell by 1.6 percent to reach 2.71 dollars per million British thermal units.
At the same time, prices were boosted by China's demand, which rose 6.5 percent year-on-year in March to a record 11.86 million bpd, official Reuters' figures showed.
Demand for oil has increased at the fastest pace since May last year.
The strength of demand comes in light of rising crude imports near a record level and the strength of the pace of oil processing.
Although, lower consumption of diesel and gasoline raises concerns about the growth of China's refined oil products.
Demand for gasoline fell 2.1 percent in March to 2.78 million bpd, while demand for diesel fell 3.4 percent from a year earlier.
Reuters calculates the implicit demand for oil for a month by adding net exports of major oil products, which was announced by the Chinese Customs Administration per month, to the amount of domestic refined oil announced by the National Bureau of Statistics, without taking into account inventory changes.
The China Bureau of Statistics did not provide separate data for the production of January and February.