Oil close to late-2014 highs on supply cuts, strong demand
Brent crude oil futures LCOc1 were at $73.87 per barrel at 0209 GMT, up 9 cents, or 0.1 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 11 cents, or 0.2 percent, at $68.40 a barrel.
Both Brent and WTI hit their highest levels since November 2014 earlier this week, at $74.75 and $69.56 per barrel respectively.
Led by top exporter Saudi Arabia, the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has been withholding production since 2017 to draw down a global supply overhang that had depressed crude prices between 2014 and 2016.
“Signs of tightness are emerging in product markets as stocks saw the largest week-on-week draw since October, 2016 ... The U.S. led the draws but was also aided by draws in Singapore,” said U.S. bank Morgan Stanley.
This tightness is also a result of healthy oil demand.
“Global oil demand data so far in 2018 has come in line with our optimistic expectations, with 1Q18 likely to post the strongest year-on-year growth since 4Q10 at 2.55 million barrels per day,” U.S. bank Goldman Sachs said in a note published late on Thursday.
“The first key geopolitical issue is the expiration of the current U.S. waiver of key sanctions against Iran,” said Standard Chartered Bank said in a note this week, referring to a deadline on May 12 by when U.S. President Donald Trump will decide whether or not to re-introduce sanctions against Iran.
One factor weighing on price gains has been rising U.S. production C-OUT-T-EIA, which has jumped by a quarter since mid-2016 to 10.54 million barrels per day, making the United States the world’s second biggest producer of crude oil behind only Russia, which pumps almost 11 million bpd.