SINGAPORE (Reuters) – Thursday's oil price rose to its highest level since the end of 2014, when US crude oil inventories declined and Saudi Arabia as a top exporter pushed higher prices through continued withholding.
Brent crude oil futures LCOc1
U.S. West Texas Intermediate (WTI) CLc1 crude oil futures rose 38 cents, or 0.6 percent, to $ 68.85 a barrel. WTI previously rose to $ 68.95, the strongest since December 2, 2014.
"The rally is due to last night's stock data and the geopolitical tensions in the Middle East in recent weeks, but these Risk premiums are quite short-lived, and investors are likely to normalize prices as tensions ease, "said OCBC analyst Barnabas Gan.
"I think oil prices are slightly higher in the short term and we should have clear signs of improving fundamentals," Gan said, adding that the market is looking for evidence of a Friday oil producers meeting.
The Organization of Petroleum Exporting Countries (OPEC) and its partners in a delivery cutoff meeting will meet in Jeddah, Saudi Arabia on April 20. OPEC will then meet on 22 June to review its oil production policy.
OPEC and other major producers, including Russia, have begun holding back production in 2017 to curb the oversupply that has depressed prices since 2014.
Reuters reported Wednesday that Saudi Arabia's top oil exporter would be happy to raise crude oil to $ 80 or $ even $ 100 a barrel, which was interpreted as a sign that Riyadh had made no changes to the agreement on supply shortages seeks.
"The Saudis and their OPEC counterparts need more oil for their fiscal positions and the Kingdom has a bold – and costly – reform program so they could continue squeezing out the lemon while they have the chance," said Greg McKenna, chief market strategist for futures brokerage AxiTrader.
Since the beginning of supply cuts, crude oil inventories have fallen from record highs to long-term averages.
In the United States, the Energy Information Administration (EIA) said on Wednesday that commercial crude oil inventories fell 1.1 million barrels a week to 13 April, reaching 427.57 million barrels, close to the five-year average of some 420 million barrels barrel.
Further support for the oil price is the expectation that the US will reintroduce sanctions on Iran's third-largest OPEC producer, which could lead to further supply reductions from the Middle East.
Additional coverage by Henning Gloystein; Editorship of Joseph Radford and Christian Schmollinger