Oil markets remained tense on Thursday on concerns over a military escalation in Syria, although prices were some way off Wednesday’s late-2014 highs as bulging U.S. supplies weighed.
A trade dispute between the United States and China also kept markets on edge.
Brent crude futures were at $72.33 per barrel at 0648 GMT, up 27 cents, or 0.4 percent from their last close.
U.S. WTI crude futures were at $67.20 a barrel, up 38 cents, or 0.4 percent from their last settlement.
In China, Shanghai crude futures rose by 10.5 yuan to 428.7 yuan ($68.28) per barrel, up 2.5 percent, with record volumes traded.
Both Brent and WTI on Wednesday hit their highest since late 2014 of $73.09 and $67.45 per barrel, respectively, after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Donald Trump warned Russia of imminent military action in Syria.
“Geopolitical risks outweighed an unexpected rise in inventories in the U.S.,” ANZ bank said.
Ongoing concerns of a prolonged trade dispute between the United States and China are also keeping markets on edge.
China lashed out at the United States on Thursday saying that the trade disputes, in which both sides have threatened to impose tariffs on imports of several products, were “single-handedly provoked by the U.S.” and that Beijing was prepared to escalate the spat if Washington did not back off from its threatened import tariffs.
The Chinese Commerce Ministry also said there had been no bilateral negotiations with the United States on the trade frictions.
Although markets were tense, supplies remain ample especially due to the United States, and analysts said this would likely weigh on prices at some point.
“Geopolitical events could keep prices elevated above $70 Brent in April and May, but our balances suggest a high likelihood of a downward correction in 2H18,” Barclays bank said.
Barclays said it expected Brent to average $63 per barrel in 2018 and $60 in 2019. For WTI, the bank forecast prices of $58 and $55 a barrel for this year and next.
U.S. crude oil inventories rose by 3.3 million barrels to 428.64 million barrels.
Meanwhile, U.S. crude production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016.
The United States now produces more crude than top exporter Saudi Arabia. Only Russia, at currently just under 11 million bpd, pumps out more.
“Barring any geopolitical shocks, we see limited upside potential for oil prices from current levels due to ongoing oversupply, mainly from the U.S. and Russia, and also a slowing demand growth outlook,” said Georgi Slavov, head of research at commodities brokerage Marex Spectron.