On the final trading day of the year, U.S. oil prices have hit their highest level since mid-2015 with a surprising drop in American output and the reduction of commercial crude inventories fueling buying. As for international markets, Brent crude oil futures increased from support of the continuous supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia as well as the heavy demand from China.
At 0806 GMT, U.S. West Texas Intermediate (WTI) crude futures were at $60.21 a barrel, up 37 cents from the last session, after reaching a June 2015 high of $60.32 earlier in session. Brent crude futures also gained, rising 45 cents to $66.61 a barrel. Brent surpassed $67 earlier in the week for the first time since May 2015.
Friday’s WTI price increases were influenced from the unexpected drop in U.S. oil production, which last week fell to 9.754 million barrels per day (bpd), according to data from the Energy Information Administration (EIA). Although, U.S. output is up 16 percent since the middle of last year, most analysts had forecast that oil production would surpass 10 million bpd by the end 2017, a level only topped by top producers Saudi Arabia and Russia.
WTI prices were pushed even higher by a drop in U.S. commercial crude storage levels, which fell by 4.6 million barrels in the week ending Dec. 22, according to the EIA. Oil inventories have dropped nearly twenty percent from their record breaking highs last March.
Brent prices have been propped up the production cuts led by the OPEC and Russia. The cuts began last January and are scheduled to continue until the end of 2018. The pipeline outages in Libya as well as the North Sea have have also sustained, although both outages are expected to resume production in early January.
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