Oil price pulls back from the high notes

OIL PRICES pulled back from multi-year highs reached earlier in the day on Thursday as warnings grew that a 13 per cent rally since early December was close to running its course.

Brent crude futures were flat from the previous day at $69.20 a barrel. In earlier trading, it hit $69.62, its highest since an intraday spike in May 2015 and just two cents away from the highest since 2014.

US West Texas Intermediate crude futures were at $63.84, up 27 cents. The contract reached a high of $64.08 per barrel earlier in the day, its highest since December 2014.

Sentiment was boosted by a surprise drop in US production and lower US crude inventories in official data.

“The undeniable fact is that (US) crude oil inventories are at their lowest level since August 2015,” said PVM Oil Associates analyst Tamas Varga. “OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average.”

Data from the US Energy Information Administration showed that crude inventories fell by almost 5 million barrels to 419.5 million barrels in the week to January 5.

US production also fell by 290,000 barrels per day (bpd) to 9.5 million bpd, the EIA said, despite expectations of output breaking through 10 million bpd.