By Bryan Sims
HOUSTON (Reuters) - Oil prices rose about 1 percent to three-year highs on Thursday, pushing the global Brent benchmark past $70 a barrel, on further signs of tightening supply in the United States and expectations that OPEC's output cuts would underpin the market.
U. S. West Texas Intermediate (WTI) crude futures
"(U. S.) crude oil inventories are at their lowest level since August 2015," said PVM Oil Associates analyst Tamas Varga. "OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average."
On Wednesday, the U. S. Energy Information Administration said crude inventories
Production slowed by nearly 300,000 barrels per day, which analysts attributed to colder-than-usual weather across the United States last week.
Adding to bullish sentiment on Thursday, market intelligence firm Genscape estimated a draw of more than 3.5 million barrels at the Cushing, Oklahoma delivery point for U. S. crude futures for the week ended Tuesday, according to traders who saw the data.
"The steady, if not rapid, decline in U. S. crude oil inventories from persistently high refinery demand and elevated exports has firmly registered with the market," said John Kilduff, partner at Again Capital LLC in New York.
Production cuts led by the Organization of the Petroleum Exporting Countries and Russia, which are set to continue throughout 2018, have underpinned prices.
The United Arab Emirates (UAE) Energy Minister and OPEC President Suhail al-Mazrouei said he expects the market to balance in 2018 and that the producer group is committed to its supply-reduction pact until the end of this year.
The greenback-denominated commodity has also benefited from weakness in the dollar <. DXY>, which neared a one-week low on Thursday, as it makes oil cheaper to buy for holders of other currencies.
Trading volumes were higher than average, with a flurry of deals at about 10:00 a.m. EST as prices jumped. More than 566,000 U. S. crude contracts had changed hands on Thursday as of 12:10 p.m., not far from the daily average of 619,000 contracts over the past 200 days of trading.
ICE Commitment of Traders figures showed speculators raised their net long holdings of Brent crude futures and options in the week to Jan. 2 to a new record. Heavy bets like this are at risk of being unwound after quick gains.
(Additional reporting by Libby George in London and Henning Gloystein in Singapore; Editing by Marguerita Choy)