OPEC supply cuts since 2017 have tightened market; oil has also risen on U.S. sanctions threat against Iran.
Oil traded near its highest in 3-1/2 years on Thursday, boosted by potential disruptions to flows from Iran and the Middle East despite a fresh demand from U.S. President Donald Trump that OPEC cut prices.
Brent crude futures were at $78.12 a barrel at 1050 GMT, down 12 cents.
U.S. crude futures were up 32 cents at $74.46, within sight of Tuesday's 3-1/2-year high above $75.
"If Trump continues to believe that OPEC are not doing enough, we would not rule out an SPR (Strategic Petroleum Reserve) release from the U.S., or possibly even export restrictions on petroleum products," ING said in a note.
"However with plenty of uncertainty over Iranian supply, and the Syncrude outage in Canada, the market is likely to remain fairly well supported in the near term."
Trump again on Wednesday accused the Organization of the Petroleum Exporting Countries of driving up fuel prices.
"The OPEC Monopoly must remember that gas prices are up & they are doing little to help," Trump wrote on his personal Twitter account. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s."
"This must be a two way street," he wrote, adding in block capitals, "REDUCE PRICING NOW!"
OPEC together with a group of non-OPEC producers led by Russia started to withhold output in 2017 to prop up the market.
Recent price rises have also been spurred by a U.S. announcement that it plans to reintroduce sanctions against Iran from November, targeting oil exports.
OPEC and Russia said in June they were willing to raise output to address concerns of supply shortages due to unplanned disruptions from Venezuela to Libya, and likely also to replace a potential fall in Iranian supplies due to U.S. sanctions.
Despite these measures, Goldman Sachs said in a July 4 note to clients that "the market will remain in deficit" in the second half of the year.
An Iranian Revolutionary Guards commander, meanwhile, said on Wednesday that Tehran might block oil shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf.
"If they want to stop Iranian oil exports, we will not allow any oil shipment to pass through the Strait of Hormuz,” Ismail Kowsari was quoted as saying.
By Dmitry Zhdannikov and Shadia Nasralla