Oil hits highest since May 2015 above $68 on tighter market
By Alex Lawler
LONDON (Reuters) – Oil rose further above $68 a barrel on Tuesday, touching its highest since May 2015, supported by OPEC-led production cuts and expectations U. S. crude inventories fell for an eighth week.
The Organization of the Petroleum Exporting Countries and allies including Russia are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories.
Brent crude, the international benchmark, was up 4 cents at $67.82 a barrel at 0949 GMT and earlier touched $68.29, its highest since May 2015. U. S. crude rose 15 cents to $61.88 and also reached its highest since May 2015.
“In view of sharply falling U. S. crude oil stocks and record-high compliance with the production cuts by OPEC, market participants are convinced that the market is continuing to tighten.”
S. government’s Energy Information Administration are expected to show U. S. crude stocks fell by 4.1 million barrels, an eighth week of decline.
The API releases its data at 2130 GMT on Tuesday and the government report is out on Wednesday.
Many producers, still suffering from a 2014 price collapse, are enjoying the rally, although they are wary it will spur rival supply sources. Iran said on Tuesday OPEC members were not keen on increased prices.
Unrest in Iran, OPEC’s third-largest producer, has lent support to prices this year although output and exports have not been affected. Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member.
There is no sign yet that OPEC is prepared to relax its supply restraint.
The rise in prices is expected to drive gains in U. S. production during 2018, offsetting curbs by others.
Still, the latest U. S. rig count, an early indicator of future output, showed a slight dip in the amount of rigs drilling for new oil, which lent support to prices.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)