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Oil steady, near three-year highs on geopolitics, tighter supply

Reuters  |  NEW YORK 

By Ayenat Mersie

NEW YORK (Reuters) - prices held steady on Thursday, remaining close to highs last reached in late 2014 on geopolitical tensions and shrinking global inventories.

futures were at $71.84 a barrel by 2:01 p.m. EDT (1801 GMT), down 22 cents. U.S. WTI crude futures were up 3 cents at $66.85. On Wednesday, both crude benchmarks hit their highest levels since late 2014.

Prices had started to pull back earlier in Thursday's session, pressured by a stronger dollar, but recovered as the dollar retreated. <.DXY>

A stronger greenback makes it more expensive to buy dollar-denominated commodities like oil

"It wasn't much of a pull back," said Walter Zimmerman, at United- "People are still nervous about what's going to happen in ..nothing was solved overnight," he said.

prices jumped on Wednesday after said it intercepted missiles over and U.S. warned of military action in Syria, both of which raised concerns about possible supply disruptions.

Fundamental signals also supported prices. The Organization of the Exporting Countries said the global stocks surplus was close to evaporating due to healthy demand and its own supply cuts.

The group is producing below its targets, meaning the world needs to use stocks to meet rising demand. said in its stocks in the developed world fell by 17.4 million barrels in February to 2.854 billion barrels, around 43 million barrels above the latest five-year average.

told in the global glut has effectively shrunk by nine-tenths since the start of 2017.

"We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400 million barrels to about 43 million above the five-year average," Barkindo said.

OPEC, and several other non-producers began trimming supply in January 2017. Their pact runs until the end of the year and meets in June to decide on its next course of action.

"There is growing confidence that the declaration of cooperation will be extended beyond 2018," Barkindo told "will continue to play a leading role."

These bullish factors more than offset pressure from a report showing crude inventories rose by 3.3 million barrels, while domestic production hit a record 10.53 million barrels per day (bpd).

(Additional reporting by and in London; Henning Gloystein in Singapore; Editing by and David Evans)

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

First Published: Thu, April 12 2018. 23:52 IST