Oil prices dipped on Wednesday after rallying for three straight days, as rising U.S. crude stockpiles offset support from OPEC supply cuts and U.S. sanctions on Iran and Venezuela.
U.S. commercial crude inventories surged by 7.2 million barrels in the week through March 29, the Energy Information Administration reported on Wednesday. Analysts in a Reuters poll expected stockpiles to fall by 425,000 barrels.
Despite the unexpected increase, oil prices did not lose much ground after the report.
U.S. West Texas Intermediate crude settled 12 cents lower at $62.46 on Wednesday, having earlier hit $62.99, the highest level since Nov. 7.
Brent futures, the international benchmark for oil prices, fell 6 cents to $69.31. They earlier reached $69.96 — the highest since Nov. 12, when they last traded above $70.
The market appeared to be taking the stockpile surge in stride because the headline increase was driven by a big jump in stocks in the U.S. Gulf Coast, one of five regions tracked by EIA. Inventories there jumped by 8.7 million barrels last week.
That increase appears to be largely due to refinery downtime in the U.S. refining hub and disruptions in ship traffic related to a fire at a petrochemicals storage facility.
"You can see that the refinery utilization is still pretty low in the Gulf Coast due to both scheduled and unscheduled refinery outages," said Andrew Lipow, president of Lipow Oil Associates. "And in addition the closure of part of the Houston ship channel impacted on crude oil exports during part of the week."
U.S. gasoline stockpiles fell by 1.8 million barrels, and distillate fuel inventories, which include diesel and home heating fuel, dropped by 2 million barrels, EIA reported.
Preliminary weekly data from EIA show U.S. production rising to 12.2 million barrels per day, which would be a record if confirmed in later readings.
Oil prices have been supported for much of 2019 by efforts by OPEC and allies such as Russia, who have pledged to withhold around 1.2 million barrels per day of supply this year.
Supply from OPEC countries hit a four-year low in March, a Reuters survey found this week. Oil production from Russia fell to 11.3 million bpd last month, but missed the country's target under the supply deal.
"We assume that OPEC crude oil production will average 30.1 million bpd in 2019 ... down from 31.9 million bpd in 2018," BNP Paribas said in a note, reducing an earlier forecast for this year by 200,000 bpd.
Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.
However, analysts say it remains unlikely that that Trump administration will not renew some of the waivers, despite officials continuing to speak publicly about zeroing out Iran's crude exports.
Vice President Mike Pence said on Tuesday the United States would continue to pressure Venezuela's oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.
Venezuela's state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data, Reuters reported later in the day.
– Reuters contributed to this story.