Crude oil futures hit a fresh near three-and-a-half-year high during European morning trading, bolstered by geopolitical risk and the unexpected drawdown in US stocks.
ICE July Brent crude futures traded as high as $80.18/b at 0948 GMT, up 90 cents from Wednesday's settle. At 1050 GMT, ICE July Brent was trading at $79.95/b, up 67 cents, while NYMEX June WTI crude futures were up 65 cents at $72.14/b.
"The US stock drawdown, on top of the current geopolitical risk, is facilitating the bullish sentiment," Sucden Financial analyst Geordie Wilkes said.
And, said Commerzbank analysts: "Current news and fundamental data point to further price rises in the short term."
US crude inventories dropped 1.404 million barrels to 432.354 million barrels the week ending May 11 as a result of increased exports, Energy Information Administration data showed Wednesday, which came as a surprise to the market where expectations were for a rise in stocks.
US crude exports jumped by 689,000 b/d last week to 2.566 million b/d, a record high, leading to a draw in crude stocks, EIA data showed.
Since testing the high of $80.18/b, Brent fell back a little, but was still hovering close to $80/b. "It is still knocking on the door -- it isn't really pulling back," Wilkes said.
Looking ahead though, Wilkes said he believed the current bullish move would benefit from a bit of a price correction to "flush out some fresh longs" and test appetite. "If Saudi Arabia and Russia do agree to fill the [supply] void left by Venezuela and Iran, we expect prices to retreat towards $75/b."
"It will be tricky to maintain this momentum," Wilkes said, adding that the market would now be looking to next month's OPEC meeting to see what sentiment emerged.
The market is also still awaiting the full impact of US President Donald Trump's decision to pull out of the Iran nuclear deal and re-impose sanctions.
"The news is in but the effect is still to come -- we know it is going to be really bullish down the road," chief commodities analyst at SEB, Bjarne Schieldrop, said Wednesday.
Total, for example, has already halted its plans to help develops Iran's South Pars gas field as it seeks to clarify whether the investment can avoid falling foul of renewed US sanctions, the French energy major said Wednesday.
