Yemisi Izuora
Oil prices on Thursday remained close to highs touched the previous day that were last seen in late 2014, buoyed as US crude inventories declined and as top exporter Saudi Arabia is expected to keep withholding supply to prop up the market.
Brent crude oil futures were at $73.79 per barrel up 31 cents, or 0.4 per cent, from their last close, just as US West Texas Intermediate, WTI crude futures were up 29 cents, or 0.4 per cent, at $68.76 a barrel.
Brent on Wednesday marked its highest level since November, 2014 at $73.93 per barrel, while WTI hit its strongest since December, 2014 at $68.91 a barrel.
Reuters reported on Wednesday that top oil exporter Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, which was seen as a sign that Riyadh will seek no changes to an Opec supply-cutting deal that was introduced in 2017 to boost prices.
“The Saudis and their colleagues in Opec need higher oil for their fiscal positions and the Kingdom is on a bold – and costly – reform programme. So they might continue to squeeze the lemon while they have the chance,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Led by Saudi Arabia, the Organization of Petroleum Exporting Countries,
OPEC, and a group of other producers that includes Russia started to withhold output in 2017 to rein in oversupply that had depressed prices since 2014.
Since the start of the voluntary restraint, crude inventories have been gradually declining from record levels towards long-term average levels.
Further supporting oil prices is an expectation that the United States will re-introduce sanctions against Opec-member Iran, which could result in further supply reductions from the Middle East.
In the United States, the Energy Information Administration,EIA, said on Wednesday that commercial crude stocks fell by 1.1 million barrels in the week to April 13, to 427.57 million barrels, which is close to the five-year average level around 420 million barrels.
With crude prices on the rise, those producers not participating in voluntary restraint are ramping up output.
US crude production has jumped by a quarter since mid-2016, to a record 10.54 million barrels per day (bpd).
That’s more than Saudi Arabia produces. Only Russia churns out more oil, at almost 11 million bpd.