"The extension of the OPEC agreement and declining inventories are all helping to drive the price higher", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.
West Texas Intermediate (WTI) for February delivery gained as much as 83cents to $62.56 a barrel on the New York Mercantile Exchange, the highest intraday price since May 2015, and traded at $62.16 at 2.59pm in Hong Kong yesterday.
As anticipated, the Energy Information Administration confirmed earlier reports that US crude inventories fell 4.9 million barrels last week - and even though bigger than expected builds in gasoline and fuel stocks offset that drawdown, it was enough to cause West Texas Intermediate on Wednesday to settle up 61 cents to $63.57 per barrel and Brent to climb 34 cents to $69.16 per barrel.
Analysts expect refinery utilization fell 0.5 percentage point last week to 96.2% of capacity. "It is premature to expect further upside to be sustainable, at least until the market gains a better grasp of the pace of USA production growth".
Wall Street closed at record highs on Thursday as rising oil prices lifted energy stocks and investors bet on a strong USA corporate earnings season.
The price spread between Brent and WTI was significantly greater in 2017 than in 2016. The increase was driven by Lower 48 onshore production (especially in the Permian Basin area) with an estimated increase of almost 330,000 b/d from 2016 to 2017.
US crude oil stocks fell last week while gasoline and distillate inventories rose more than anticipated, the Energy Information Administration said Wednesday.
The benchmark crude oil used to set prices for about half the world's oil topped $70 a barrel in London on Thursday for the first time since December 2014.
As shale oil development trends are rather uncertain, it is possible that the upward trend in crude oil prices will continue.
If US shale oil producers do fill the void and bring some balance to the market, this would be good news for consumers.
Yet despite fears, recent rising oil prices have found support from eight consecutive weeks of U.S. crude inventory drops. Oil production slid by 290,000 barrels a day to 9.49 million a day.
Oil remained on shaky ground as a bullish run-up in prices appears to have risk of deflating. USA distillate stocks jumped 8.899 million barrels the week ending December 29 to 138.8 million barrels.
Analysts are looking for an increase in gasoline stocks of 2.3 million barrels, which would fall well below the 6.05 million-barrel build seen for the same period from 2013-17. Yet for the oil majors it could hamper recovery at a time when higher crude prices and lower costs are finally seeing them return to profits.
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