Oil prices posted their strongest opening to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid ongoing supply cuts led by OPEC and Russia.
US West Texas Intermediate crude futures were at $60.63 a barrel, up 21 cents, or 0.4%, after hitting $60.74 earlier in the day, the highest since June 2015.
Brent crude futures, the international benchmark, were at $67.18 a barrel, up 31 cents, or 0.5%, after hitting a May 2015 high of $67.29 a barrel earlier in the day, CNBC reported.
It was the first time since January 2014 that the two crude oil benchmarks opened the year above $60 per barrel.
“Falling inventories globally and strong economic growth offset the restart of the Forties Pipeline and the resumption of production following a pipeline outage in Libya,” said Jeffrey Halley, senior market analyst at futures brokerage Oanda, in Singapore. The 450,000 barrels per day capacity of Forties Pipeline system in North Sea returned to full operations on Dec. 30 after an unplanned shutdown.
Oil markets have been supported by a year of production cuts led by the Middle East-dominated Organization of Petroleum Exporting Countries and Russia. The cuts started in January 2017 and are scheduled to cover all of 2018.
US commercial crude oil inventories have fallen by almost 20% from their historic highs last March to 431.9 million barrels.
Strong demand growth, especially from China, has also been supporting crude.
Only rising US production, on the verge of breaking through 10 million bpd, is somewhat hampering the outlook into 2018.
“We think US tight oil production growth warrants close monitoring, as it could spoil OPEC’s market-balancing efforts, pushing the market into surplus in 2018,” Barclays bank said on Tuesday.
US oil production, driven largely by onshore tight shale oilfields, has risen by almost 16% since mid-2016, to 9.75 million bpd at the end of last year.
Consultancy Rystad Energy said “US crude oil production capacity has reached 10 million barrels per day”.
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