Crude futures prices rose to fresh three-year highs on Thursday, as a sharp stock draw in the US and signals that OPEC could continue production cuts into next year continued to add bullish momentum to the market.
At 1000 GMT, June ICE Brent crude futures were up 65 cents at $74.13/b, the highest level since November 2014, while the NYMEX May WTI contract was up 56 cents at $69.03/b. The rises came in spite a stronger dollar, which is often bearish for commodities prices. On Thursday, the US dollar was up 0.04%.
US crude oil inventories fell 1.071 million barrels to 427.567 million barrels for the week ended April 13, according to data from the US Energy Information Administration on Wednesday. US gasoline stocks fell by 2.968 million barrels to 235.967 million barrels, while distillate stocks fell 3.107 million barrels to 125.34 million barrels.
"The fact that the gasoline inventory reduction was more pronounced than anticipated was due to record-high gasoline demand, which is extremely unusual outside the summer driving season," said Commerzbank analysts in a note.
That supported figures from the American Petroleum Institute released on Tuesday that showed a surprise draw down in crude stocks for the week to April 13, overturning expectations. Analysts surveyed by S&P Global Platts had forecast a rise in crude stocks of 625,000 barrels.
Meanwhile, the market is looking ahead to meetings between OPEC and Russian energy ministers on Thursday and Friday in Jeddah, in Saudi Arabia.
On Wednesday, media reports said that Saudi Arabia would be happy to see crude rise to $80/b or even $100/b, and will not seek to alter the current production cut deal under OPEC, which has also provided bullish sentiment to the overall market, coming on the back of comments from several OPEC officials suggesting that the cuts could be extended into 2019.
"Given the tighter global oil balance next year such an objective is more than just wishful thinking," said Tamas Varga, an analyst at PVM. "Another $20/b increase will greatly help the Saudi Aramco IPO next year and would also reduce the country's debt."
