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Brent crude tops $70 a barrel as global inventories tighten

Reuters  |  HOUSTON 

By Bryan Sims

HOUSTON (Reuters) - prices rose about 1 percent to three-year highs on Thursday, pushing the Brent past $70 a barrel, on further signs of tightening supply in the States and expectations that OPEC's output cuts would underpin the market.

surged to $70.05 a barrel, its highest since November 2014. As of 12:54 p.m. EST (1754 GMT), the contract was trading 56 cents, or 0.8 percent, higher at $69.76. Brent has gained 5 percent since the beginning of the year, picking up from its late-year surge.

U.S. Intermediate (WTI) crude futures rose 86 cents, or 1.4 percent, to $64.43, the highest since December 2014.

"(U.S.) crude inventories are at their lowest level since August 2015," said PVM Associates "is edging ever closer to its desired target of reducing industrial stocks to the five-year average."

On Wednesday, the said crude inventories fell almost 5 million barrels to 419.5 million barrels last week. Production slowed by nearly 300,000 barrels per day, which analysts attributed to colder-than-usual weather across the States last week.

Adding to bullish sentiment on Thursday, market intelligence firm estimated a draw of more than 3.5 million barrels at the Cushing, 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 inventories from persistently high refinery demand and elevated exports has firmly registered with the market," said John Kilduff, partner at in

Production cuts led by the Organization of the Exporting Countries and Russia, which are set to continue throughout 2018, have underpinned prices.

The Arab Emirates (UAE) and said he expects the market to balance in 2018 and that the 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 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.

Brent may not be able to sustain a $70 level unless additional from the bolstered bullish sentiment, analysts said.

ICE Commitment of Traders figures showed speculators raised their net long holdings of 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.

"You have a very overbought market. is acting like an Internet stock and when it does that you know it's getting overcooked," said Walter Zimmerman, for United-

(Additional reporting by in London and Henning Gloystein in Singapore; Editing by Marguerita Choy)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 23:44 IST