NEW YORK - Oil rose 2 percent on Tuesday as attention centered on geopolitical factors tightening supplies that are leading to falling exports from Venezuela and declining U.S. inventories.
Despite concerns about weaker demand due to an economic slowdown, oil prices have risen more than 25 percent this year, supported by supply curbs by the Organization of the Petroleum Exporting Countries plus allies, and losses due to U.S. sanctions on Iran and Venezuela.
"We're seeing increasing attention paid to what is going on in Venezuela and to the affect of sanctions," said Gene McGillian, director of market research at Tradition Energy.
"Buyers are driving price higher due to expectations that tightening of waivers on U.S. sanctions on Iran will create a tighter fundamental picture," he said.
Another power cut in Venezuela, the second to hit the OPEC nation this month, raised concern about the country's oil exports.
Brent was up 79 cents at $68.00 a barrel by 11:59 a.m. EDT (1559 GMT), not far from its 2019 high of $68.69 reached on March 21.
U.S. crude futures' gains were sharper, rising $1.25 a barrel, or 2.1 percent, to $60.07, ahead of weekly inventory data.
U.S. crude inventories were forecast to have fallen last week by 2.4 million barrels in what would be a third straight weekly decline. Industry data from the American Petroleum Institute is due at 4:30 p.m., followed by the government's report on Wednesday.
Worries about demand have limited oil's rally as manufacturing data from Asia, Europe and the United States pointed to an economic slowdown, although bullish bets by some investors are rising.
"So far, demand concerns have not proven too much of a headwind," analysts at JBC Energy wrote.
Investor concern over the global economy had intensified on Friday after disappointing German and U.S. factory data led to an inversion of the U.S. Treasury yield curve, which some see as a leading indicator of recession.
"Recession risks have risen to the highest since 2008," said Ole Hansen, head of commodity strategy at Saxo Bank.