On Thursday, after slipping below $69 a barrel oil rebounded, supported by a record drawdown of U.S. crude stockpiles at an Oklahoma delivery center, regardless of concerns that OPEC-led output cuts will increase Unites States’ supplies.
Crude is just under its highest price since late 2014, maintained by supply cuts led by the Organization of the Petroleum Exporting Countries and apprehension that unrest in producer nations including Nigeria could additionally cut output.
Last week, U.S. crude inventories dropped 6.9 million barrels compared to predictions of a 3.5 million-barrel draw, according to the U.S. Energy Information Administration. At the Cushing, Oklahoma delivery center for U.S. crude futures dropped 4.2 million barrels, the largest draw since in fourteen years.
Following the previous weeks drop due to cold weather, last week U.S. crude production increased to 9.75 million barrels per day (bpd).
On Thursday, OPEC’s monthly report had raised the forecast regarding oil supply from non-members in 2018.
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“Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil,” OPEC said in the report.
Brent crude, the global benchmark, down 8 cents a barrel trading at $69.30 by 11:26 a.m. EST, after earlier in the session falling to $68.80 a barrel. Earlier this week it touched its highest since December 2014 at $70.37. U.S. crude was up 1 cent at $63.98, also having hit its highest since December 2014 earlier this week.
Some analysts believe that the rally is coming to an end for oil.
“The upside is now limited for oil prices,” said Fawad Razaqzada, market. “U.S. oil producers will ramp up production in the coming months.”
The militant group Niger Delta Avengers has threatened to attack Nigeria’s oil sector in the next few days, which could hinder supplies in Africa’s largest exporter.
“The impact of such a threat, if carried out, would be significant on the global supply and demand balance,” said Tamas Varga an oil broker. “The market is still sensitive to geopolitical developments.”