Investing.com – Crude oil prices settled near three-year highs on Thursday amid expectations that global oil demand growth and ongoing OPEC cuts would continue to reduce excess supplies.
On the New York Mercantile Exchange crude futures for January delivery rose 0.36% to settle at $63.80 a barrel, while on London's Intercontinental Exchange, Brent gained 0.12% to trade at $69.30 a barrel. Brent crude hit a three-year high intraday rising above $70 a barrel.
The rally in oil prices continued unabated amid investor optimism that key factors supporting the late-2017 rally such as strong OPEC compliance, and bullish oil demand growth amid rising global economic growth would offset the expected ramp up in non-OPEC output.
“Everyone is committed and everyone is benefiting from this [output cut] agreement, and I have no doubt that we will continue a year of compliance in 2018,” said United Arab Emirates Energy Minister Suhail Al Mazrouei.
Goldman Sachs noted recently that markets are dealing with “two offsetting dynamics” as stronger economic growth has fuelled oil demand, boosting oil prices, but that tends to attract a ramp up in shale output which could cap long-term oil prices.
Also supporting oil prices was Wednesday’s bullish inventories data showing an unexpected drop in US production and larger than expected draw in US crude oil supplies.
Inventories of U.S. crude fell by roughly 4.95 million barrels for the week ended Jan. 5, beating expectations for of a draw of 3.44 million barrels. U.S. output fell by nearly 290,000 barrels a day to 9.49 million barrels a day (bpd), according to the U.S. Energy Information Administration.