By Henning Gloystein
SINGAPORE (Reuters) - Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping ever closer to $80 per barrel as supplies tighten and demand remains strong.
Brent crude futures were at $79.40 per barrel at 0655 GMT, up 0.12 percent from their last close. They earlier touched their highest in more than 3-1/2 years at $79.49 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were at $71.67 a barrel, up 18 cents, or 0.3 percent, from their last settlement. That was not far off Tuesday's $71.92 a barrel - also a level not seen since November 2014.
ANZ bank said on Thursday that Brent was "now threatening to break through $80 per barrel ... (as) geopolitical risks continue to support prices, (and) an unexpected fall in inventories in the U.S. got investors excited."
U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.
ANZ said the falling U.S. inventories were "raising concerns of tight markets heading into the U.S. driving season," during which demand typically rises.
Even at $80 per barrel, the costs of oil are huge, with Asia's consumption costing $1 trillion a year, twice as much as during the price lull of 2015/2016.
Not all indicators pointed to a tighter market, however.
The International Energy Agency (IEA) said on Wednesday it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.
And although supplies currently only stand at 98 million bpd due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), the IEA said "strong non-OPEC growth ... will grow by 1.87 million bpd in 2018."
Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd, putting the United States within reach of top producer Russia's 11 million bpd.
Brokerage Marex Spectron said the surge in U.S. supplies was "strongly price-bearish", adding the economic outlook was also "firmly bearish" as "short-term credit conditions have worsened which ... hasn't been priced correctly by the market."
Goldman Sachs, though, said even with a slowdown in demand and soaring U.S. output, global oil markets would remain tight.
Goldman also said the tight market left "room for OPEC to exit (its production cuts) without significant price impact."
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)