Oil at highest since 2015 on inventory drawdown, Iran unrest

Ivan Schwartz
January 7, 2018

US oil stocks fell more than expected, continuing a steady drawdown of supplies in the world's largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments.

Brent crude LCOc1, the global benchmark, rose 5 cents to $67.92 a barrel as of 1:53 a.m. EST (1853 GMT) after hitting a high of $68.27 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures hit $60.32, the highest since June 2015.

Oil prices dipped from heights last seen in 2015 yesterday as a leap in American production undermined a 10 per cent rally driven by supply disruptions and political tension in Iran.

Brent crude, the worldwide benchmark, on Friday settled up 23 cents at $68.07 a barrel after hitting a high of $68.27 earlier in the session.

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Beyond a brief intraday spike in May, 2015, these were the highest crude price levels since December, 2014, at the start of the oil price downturn. Domestic demand was also higher: USA product supplied for crude oil and petroleum products was at the highest level since 2007. USA commercial crude inventories C-STK-T-EIA fell by 7.4 million barrels in the week to December 29, to 424.46 million barrels, according to data from the Energy Information Administration (EIA).

Despite relatively high US crude oil production, curtailments in production by members of the Organization of the Petroleum Exporting Countries (OPEC) and robust global demand supported crude oil price increases in 2017, EIA said.

The Organisation of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russian Federation and other non-Opec producers. While Saudi Arabia and Iran cut their production in December by 20,000 bpd each, Libya's fell for reasons outside the control of the National Oil Corporation: a pipeline blast temporarily took off between 70,000 and 100,000 bpd off daily production.

Analysts expect US production to top 10 million bpd in the next few weeks and to keep growing, limiting efforts by other producers to cap global supplies.

Other reports by GizPress

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