Oil prices fell on Friday, dropping away from highs last seen in 2015, as soaring US production undermined a 10% rally from December lows that were driven by tightening supply.
US West Texas Intermediate crude futures were at $61.81 a barrel. That was 20 cents, or 0.3%, below their last close. WTI hit a $62.21 the previous day, which was its strongest since May 2015.
Brent crude futures were at $67.88 a barrel, 19 cents, or 0.3%, below their last settlement. Brent hit $68.27 the day before, also the highest since May, 2015, CNBC reported.
Oil prices have received general support from production cuts led by OPEC and Russia, which started in January last year and are set to last through 2018, as well as from strong economic growth and financial markets.
That has helped tighten markets. US commercial crude inventories fell by 7.4 million barrels in the week to Dec. 29 to 424.46 million barrels, according to data from the Energy Information Administration.
That is down 20% from their historic peaks last March and close to the five-year average of 420 million barrels.
US bank Jefferies said the oil price “upside from here is not obvious to us”, although it added that “we believe the oil market will remain undersupplied through 2018”.
Ruecker of Julius Baer said crude prices above $60 per barrel project an “overly rosy picture as oil disruptions in the North Sea have been removed and US oil production surpassed the 2015 highs in October and is set to climb to historic highs this year”.
Lukman Otunuga, analyst at futures brokerage FXTM, struck a similarly cautious tone.
“Oil started the New Year on an incredibly bullish note ... in part due to OPEC’s supply cut rebalancing the markets,” he said.
“While the current momentum suggests that further upside is on the cards, it must be kept in mind that US shale remains a threat to higher oil prices.”
