Oil prices edged higher on Tuesday, with U.S. crude touching its highest since December 2014, supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week.
The Organization of the Petroleum Exporting Countries and allies including Russia are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories.
U.S. West Texas Intermediate crude (WTI) rose 95 cents, or 1.5 percent, to $62.68 a barrel by 11:55 a.m. EST (1655 GMT) after touching its highest since December 2014 at $62.80.
Brent crude was up 81 cents, or 1.2 percent, at $68.59 per barrel after hitting a session high of $68.74, its highest since May 2015.
OPEC is cutting output by even more than it promised [OPEC/O] and the restraint is reducing oil stocks globally, a trend most visible in the United States, the world’s largest and most transparent oil market.
Supply reports this week from industry group the American Petroleum Institute and the U.S. government’s Energy Information Administration are expected to show U.S. crude stocks fell by 4.1 million barrels, an eighth week of decline. [EIA/S]
The API releases its data at 4:30 p.m. EST (2130 GMT) on Tuesday and the government report is due at 10:30 a.m. on Wednesday.
“We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019,” Standard Chartered analysts said in a note.
Unrest in Iran, OPEC’s third-largest producer, has lent support to prices this year although output and exports have not been affected. Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member.
There is no sign yet that OPEC is prepared to relax its supply restraint. (Reuters)