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Oil surges to highest since 2014 as global stocks tighten

Reuters  |  LONDON 

By George

(Reuters) - prices surged to their highest since 2014 on Thursday on tightening crude stocks and after OPEC members said they would stick with output cuts for now despite gains in Brent to nearly $70 per barrel.

Brent crude futures hit $69.88, their highest since December 2014. By 1531 GMT, the contract was trading at $69.70, 50 cents above the last close.

U.S. Intermediate (WTI) crude futures surged to $64.77, also the highest since December 2014, before edging back to $64.42, 85 cents above the last close.

Sentiment received a boost from a surprise drop in U.S. production and lower U.S. crude inventories.

"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

Data from the showed that crude inventories fell by almost 5 million barrels to 419.5 million barrels in the week to Jan. 5.

U.S. production declined by 290,000 barrels per day (bpd) to 9.5 million bpd, the EIA said, despite expectations of output breaking through 10 million bpd.

The drop in production, likely to be because of extremely cold weather that halted some onshore output in North America, was expected to be shortlived.

Analysts said U.S. stock draws were driving the market.

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

On Thursday, UAE minister and current OPEC 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.

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


Still, downward pressure emerged in the physical market, where and this week cut prices to remain competitive.

Fuel inventories in and the remain ample.

In Asia's trading hub, average refinery profit margins have fallen below $6 a barrel, their lowest seasonal level in five years.

"Markets are getting a bit fatigued and a healthy correction could be on the cards," said Stephen Innes, of trading for Asia/Pacific at in

(Additional reporting by in Singapore; Editing by Dale Hudson)

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

First Published: Thu, January 11 2018. 22:57 IST