SINGAPORE: U.S. oil prices hit their highest levels since mid-2015 on the last trading day of the year as an unexpected fall in American production, as well as a fall in commercial crude inventories, stoked buying.
In international markets, Brent crude oil futures were also up, supported by ongoing supply cuts by top producers OPEC and Russia.
U.S. West Texas Intermediate (WTI) crude futures were at $60.16 a barrel at 0210 GMT, up 33 cents or 0.5 percent from their last close. The rise saw WTI hitting its highest level since June 2015 on the final trading day of 2017.
Brent crude futures – the international benchmark for oil prices – were also up, rising 33 cents or 0.5 percent to $66.49 a barrel. Brent broke through $67 earlier this week for the first time since May 2015.
The price rises were driven by a surprise drop in U.S. oil production, which last week dipped to 9.754 million barrels per day (bpd), down from 9.789 million bpd the previous week, according to data from the Energy Information Administration (EIA) released late on Thursday.
U.S. output is still up by almost 16 percent since mid-2016, but most analysts had expected production to break through 10 million bpd by the end of this year – a level only surpassed by top exporter Saudi Arabia and top producer Russia.
WTI prices were further boosted by a fall in U.S. commercial crude storage levels, which dropped by 4.6 million barrels in the week to Dec. 22 to 431.9 million barrels, according to the EIA.
Inventories are now down by almost 20 percent from their historic highs last March, and well below this time last year or in 2015.
A YEAR OF CUTS
In international markets, Brent prices have been supported by a year of production cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia. The cuts started last January and are scheduled to cover all of 2018.
Pipeline outages in Libya and the North Sea have also been supporting oil prices, although both these disruptions are expected to be resolved by early January.
Consultancy JBC Energy said the Libyan pipeline outages had “no major impact on exports”.
Heading into 2018, traders said market conditions were relatively tight due to healthy demand growth and the OPEC and Russia-led supply cuts.