Brent Crude Trades at Highest Price Since December 2014

Reuters

Used oil barrels are stacked at a storage facility in Seattle, Washington February 12, 2015.

For the first time in more than three years when oil prices first took a dive, Brent crude hit $71 a barrel on Thursday on news that inventories had fallen again in the US.

Futures gained as much as 1.3% in NY.

"Demand is outpacing supply", Brian Kessens, who helps manage US$16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. The market sentiment on crude oil price recovery is now positive largely driven by the stronger economic outlook as well as the ongoing OPEC cuts.

"Probably, the oil market will probably balance in April".

US crude climbed to $66.44, also the highest since early December 2014, before dipping to $66.11, up 50 cents, according to Reuters.

Murban crude, a light grade from Abu Dhabi, is now valued at a premium of 23 cents a barrel to its official selling and has traded at a premium for the past six months, the longest streak since 2016.

US crude stockpiles have been dropping, underscoring the idea that global supply is rebalancing after a glut.

The U.S. dollar index hit a three-year low Wednesday after Treasury Secretary Steven Mnuchin said a weaker dollar is good for the U.S. Dollar weakness typically encourages purchases of dollar-denominated commodities, like crude. The American Petroleum Institute publishes industry data late in the trading day Tuesday, followed by official estimates from the U.S. Energy Information Administration on Wednesday.

This is "somewhat of a relief rally in a way because it was another draw, as opposed to a big build", said Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston.

US crude inventories C-STK-T-EIA fell 1.1 million barrels in the week to January 19, to 411.58 million barrels, the Energy Information Administration (EIA) said on Wednesday. Seven analysts expect stockpiles to fall, and two expected them to rise. The arbitrage "gives the U.S. an incentive to export refined products".

In Europe, crude oil futures also traded higher during the late trading session on Tuesday on the improved global economic outlook as the market looked forward to the release of United States crude stocks data.

And OPEC is predicting rising global oil demand over the next four years will push prices even higher.

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