Oil prices rose on Tuesday, lifted by output cuts led by producer group OPEC as well as healthy demand, although analysts said economic headwinds posed downside risks to crude markets.
U.S. West Texas Intermediate (WTI) crude oil futures were at $56.99 per barrel at 0012 GMT, up 20 cents, or 0.4 percent, from their last settlement.
Brent crude futures were at $66.76 per barrel, up 18 cents, or 0.3 percent.
Bank of America Merrill Lynch said despite economic headwinds “we still see Brent prices averaging $70 per barrel this year and expect WTI to lag, averaging $59 per barrel in 2019.”
The U.S. bank said this was in part because of strong demand for marine diesel expected from next year as part of new fuel rules coming in place by the International Maritime Organization.
“With diesel yields already maxed out, refiners may need to lift runs in 2H19 to meet rising demand for marine distillates,” Bank of America said.
It added that supply cuts this year by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia — known as the OPEC+ alliance — aimed at tightening oil markets were also supporting crude prices.
Traders also pointed to the ongoing political and economic crisis in Latin American OPEC-member Venezuela as an oil price driver.
Venezuela’s opposition-run congress on Monday declared a “state of alarm” over a five-day power blackout that has crippled the country’s oil exports and left millions of citizens scrambling to find food and water.