Oil hits highest since 2014 amid optimism over tightened supply

Oil hits highest since 2014 amid optimism over tightened supply

World oil demand in 2018 is set to grow by an additional 100,000 barrels per day, according to the latest revision to the figure by the U.S. Brent crude gained 18 cents at $67.96 per barrel by 11:08 a.m. EST and earlier in the session touched $68.29, its highest since May 2015.

"You're so long this market at this point, you could certainly get more interest at these levels", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. Output curbs by the Opec and allied suppliers have buoyed prices, with producers promising to continue the curbs for all of 2018.

Crude oil prices fell Friday, dropping from highs last seen in 2015, as soaring US production undermined a 10% rally from December lows that were driven by tightening supply and political tensions in OPEC member Iran, Reuters reported.

OPEC has no formal target for oil prices.

According to the U.S. Energy Information Administration, global petroleum and other liquid fuel inventories fell on average for the first year since 2013 last year.

A third OPEC source said market fundamentals did not justify the price rally. "We expect to see growth near 2 million barrels per day in 2018 and 1.3 million barrels per day in 2019". Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member. Only top producers Russian Federation and Saudi Arabia produce more.

Some analysts have said a rise in USA shale oil production could discourage OPEC and Russian Federation to maintain their deal to curb supply until the end of the year for fears of losing market share.

Pump jacks bring oil up from wells in North Dakota.

The EIA forecast that US crude oil production will average 10.3 million barrels per day in 2018 and 10.8 million barrels per day in 2019, breaking historical records for annual average production.

Traders said the gains were due to a slight decline in the number of USA rigs drilling for new production, which eased by five in the week to January 5, to 742, according to data from oil services firm Baker Hughes.

"We are in winter, a season in which prices go up as demand for petroleum products goes up", Iranian oil minister added. "But for now, the bullish trend remains intact as prices remain above key supports".

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