By Libby George and Dmitry Zhdannikov
LONDON (Reuters) - Oil prices edged off highs last reached in late 2014 due to rising U.S. stocks but remained well supported by mounting geopolitical tension in the Middle East, shrinking global oil inventories and expectations of a supply cut extension by OPEC.
Brent crude futures were at $71.84 a barrel at 1315 GMT on Thursday, down 22 cents from their last close. U.S. WTI crude futures were down 12 cents at $66.70.
Both Brent and WTI on Wednesday hit their highest since late 2014 at $73.09 and $67.45 a barrel respectively after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Donald Trump warned Russia of imminent military action in Syria.
But as oil production collapsed in OPEC member Venezuela and is still facing hiccups in countries such as Libya and Angola, the oil exporters' group is still producing below its targets, meaning the world needs to use stocks to meet rising demand.
The Organization of the Petroleum Exporting Countries said in its monthly report oil 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.
"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.
"There is growing confidence that the declaration of cooperation will be extended beyond 2018," Barkindo told Reuters. "Russia will continue to play a leading role."
Despite this, supplies remain ample and analysts said this would weigh on prices eventually.
Barclays said that geopolitical events could keep Brent prices elevated above $70 in April and May, but a downward correction was possible in the second half of the year.
U.S. crude oil inventories rose by 3.3 million barrels to 428.64 million barrels, while U.S. crude production last week hit a record 10.53 million barrels per day (bpd).
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)