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Crude oil near three-year high amid tight supply, trading above $68

Brent crude, the international benchmark, was up 32 cents at $68.10 a barrel, US crude rose 37 cents to $62.10

Reuters  |  London 

Oil, Crude, gas, pump, opec, production, glut

Oil rose further above $68 a barrel on Tuesday, touching its highest since May 2015, supported by Opec-led production cuts and expectations inventories fell for the 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.

Brent crude, the international benchmark, was up 32 cents at $68.10 a barrel at 1311 GMT and earlier touched $68.29, its highest since May 2015. rose 37 cents to $62.10 and also reached its highest since May 2015.

"remain on an upward trajectory," said Carsten Fritsch, analyst at Commerzbank.

"In view of sharply falling oil stocks and record-high compliance with the production cuts by Opec, market participants are convinced that the market is continuing to tighten."

is cutting output by even more than it promised 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 American Petroleum Institute and the US government's Energy Information Administration are expected to show stocks fell by 4.1 million barrels, an eighth week of decline.

The API releases its data at 2130 GMT on Tuesday and the government report is out on Wednesday.

Many producers, still suffering from a 2014 price collapse, are enjoying the rally, although they are wary it will spur rival supply sources.

Iran said on Tuesday members were not keen on increased prices.

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 member.

There is no sign yet that is prepared to relax its supply restraint.

A senior source from a major Middle Eastern oil producer said on Monday would boost output only if there were significant and sustained production disruptions from Iran and Venezuela.

The rise in prices is expected to drive gains in US production during 2018, offsetting curbs by others.

Still, the latest US rig count, an early indicator of future output, showed a slight dip in the amount of rigs drilling for new oil, which lent support to prices.

First Published: Tue, January 09 2018. 19:27 IST