Oil prices had their highest January opening since 2014 on Tuesday, with Brent and WTI crude prices rising to mid-2015 highs, supported by ongoing supply cuts led by OPEC and Russia as well as strong demand.
U.S. West Texas Intermediate (WTI) crude futures were at $60.64 a barrel at 0220 GMT, up 22 cents, or 0.4 percent, after hitting a June 2015 high of $60.68 earlier in the day.
Brent crude futures – the international benchmark for oil prices – were at $67.20 a barrel, up 33 cents, or 0.5 percent, after hitting a May 2015 high of $67.23 a barrel earlier in the day.
It was the first time since January 2014 that both crude oil benchmarks opened the year above $60 per barrel.
The 450,000 barrels per day (bpd) capacity Forties pipeline system in the North Sea returned to full operations on December 30 after an unplanned shutdown.
More fundamentally, oil markets have been supported by a year of production cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia. The cuts started in January 2017 and are scheduled to cover all of 2018.
Strong demand growth, especially from China, has also been supporting crude.
“Oil inventories have been declining since March 2017 and OPEC have agreed to extend production cuts until the end of 2018 so it is probably uncontroversial to say that the fundamental outlook for oil has improved since the beginning of 2017,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
U.S. commercial crude oil inventories have fallen by almost 20 percent from their historic highs last March, to 431.9 million barrels.
Only rising U.S. production, which is on the verge of breaking through 10 million bpd, is somewhat hampering the outlook for into 2018.
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