Oil futures steadied after setting a 2016 high on Thursday as traders locked in profits, though analysts said supply disruptions, strong investor appetite and a weakening dollar could push prices higher soon.
Brent crude futures were trading at $47.22 per barrel at 0942 GMT, up 4 cents from their last settlement and off an earlier high of $47.47. U.S. West Texas Intermediate (WTI) futures were down 2 cents at $45.31 a barrel.
Both Brent and WTI have rallied more than 70 percent since their respective 2016 lows in January and February.
Record crude storage figures may have spurred some investors to take profits on Thursday by closing positions betting on a rise in prices, traders said.
Government data on Wednesday showed that U.S. crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 million barrels. [EIA/S]
Despite slipping from the highs, analysts said oil market sentiment had clearly turned bullish, and further price rises were likely.
“We … appear to be at the beginning of a bull market,” U.S. investment bank Jefferies said on Thursday.
Analysts also said there were immediate supply risks from Venezuela, which is facing a severe electricity crisis, that needed to be factored in.
“Venezuela is an immediate supply risk. In the next two weeks there is potential to have some serious disruption,” Olivier Jakob at consultancy Petromatrix said.
Falling U.S. output has also been a supporting factor in oil’s recovery.
“The recent trend of rising crude oil prices received another boost after U.S. output was shown to have fallen again last week,” ANZ bank said.
U.S. Energy Information Administration (EIA) data showed that crude production fell to 8.94 million barrels per day (bpd) last week, down almost half a million bpd from last year.
Analysts said further bullish momentum could emerge due to the ongoing weakness in the dollar, which is down almost 6 percent this year against a basket of leading currencies.
A weaker greenback makes dollar-traded crude cheaper to buy for countries using other currencies.
The Federal Reserve said on Wednesday it would leave U.S. interest rates unchanged while the Bank of Japan said on Thursday it would hold back from expanding monetary stimulus, pushing the yen higher against the dollar.