U.S. West Texas Intermediate crude (WTI) gained 36 cents to $62.09 and reached its highest since May 2015 as well at $62.56. U.S. Energy Information Administration forecasts U.S. crude oil production will climb to more than 10 million barrels per day by the first quarter of 2018, exceeding 11 million bpd in 2019.
Brent, the global benchmark, rose 38 cents, or 0.55%, to $69.20 a barrel in ICE Futures Europe.
Brent crude doubled in the past one year and touched Dollars 70 a barrel mark yesterday, the highest since December 2014.
Last year, Opec and other nations including Russian Federation said they would extend a deal to cut production to help support oil prices that had fallen below $50 a barrel when the agreement was struck in 2016. In an effort to prop up prices, OPEC, together with Russian Federation and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018. The deal is widely being credited with bringing global inventories closer to their five-year average from a record high. The second factor, the current political protests in Iran, has sparked concerns over the future viability of oil production in the OPEC member state. This could discourage the OPEC and Russian Federation to maintain their oil supply collusion until the end of the year, as many producers within the OPEC itself won't be happy to lose further market share to the US.
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U.S. crude stockpiles fell to 419.5 million barrels last week, the lowest level since August 2015, according to EIA data Wednesday. Oil prices are up around 5% already in 2018. In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with US crude oil production increasing more than any other country.
Worldwide crude demand is 96 million barrels a day and the country imports around 4.2 million barrels daily or 1,568 million barrels per annum, making it the third-largest consumer globally. Asian oil prices are higher than in the rest of the world. The rally continued early Tuesday with Brent, the global benchmark for the price of oil, at around $68 per barrel.
It was the bigger than expected declines in United States oil inventories, which is the longest stretch of falling inventories during winter in a decade, that is supporting the oil price. Domestic demand was also higher: USA product supplied for crude oil and petroleum products was the highest level since 2007.
"EIA estimates it costs roughly $0.50/Bbl more to transport WTI from the U.S.to Asia than it costs to ship Brent from the North Sea to Asia", EIA/STEO reported.