Oil prices hit fresh highs

CRUDE oil prices hit new multi-year highs yesterday as OPEC-led production cuts and healthy demand helped to balance the market, but analysts warned of possible overheating.

A broad, global market rally, including stocks, has also been fuelling investment into crude oil futures.

U.S. West Texas Intermediate (WTI) crude futures were at $63.34 a barrel, up 38 cents, at 1440 GMT. Earlier prices rose to $63.67, the highest since Dec. 9, 2014.

Brent crude futures were at $69.02 a barrel, 20 cents above their last close. Brent earlier hit $69.37, the highest since May 2015.

“We’re still drawing U.S. stocks and that continues to support a very positive sentiment,” said Olivier Jakob, managing director of PetroMatrix.

He noted that physical Brent was above $70 per barrel - a psychologically important level.

“It will trigger some increased discussion within OPEC,” Jakob said.

The Organisation of the Petroleum Exporting Countries, together with Russia and a group of other producers, last November extended an output-cutting deal to cover all of 2018.

The cuts were aimed at reducing a global supply overhang that had dogged oil markets since 2014.

But some in the producer group fear current price gains could prompt shale companies to flood the market.

U.S. crude oil production is expected to hit 10 million barrels per day (bpd) next month, leaving only Russia and Saudi Arabia at higher levels.