Oil recovers earlier losses; trades above $70

Oil Rises

The price of a barrel of North America's crude oil benchmark topped $65 USA for the first time since 2014 on Wednesday, pushed up by new data showing crude inventories have now declined for 10 weeks in a row.

Another indication that the excess supply is diminishing, US crude inventories dropped for a record 10th straight week to the lowest since February 2015, according to Wednesday's reported official figures.

Crude oil futures were flat Thursday, hovering near yesterday's 3-year highs.

U.S. West Texas Intermediate (WTI) crude futures were trading 57 cents, or 0.8 per cent higher, at $66.08 a barrel.

Futures have climbed 3.8% in NY this week after reaching the highest since December 2014 on Thursday.

USA output has grown by more than 17 per cent since mid-2016, and is now on par with that of top exporter Saudi Arabia.

"The depreciation of the US dollar is also allowing oil prices to make further gains", said Carsten Fritsch, analyst at Commerzbank.

Oil is a dollar-denominated commodity and when the USA dollar becomes weaker, its therefore less expensive for other currency-holders to buy it.




U.S. oil inventories, as measured by the Energy Information Administration at the Oklahoma hub, fell by 1.1 million barrels in the week ended January 19.

Commercial oil stocks remain more than 100 million barrels above the five-year average, which is still OPEC's official target. Reduced flows from the Keystone pipeline from Canada helped drain supply there, along with further outflows from the new Diamond Pipeline.

"That, and the Dollars fall, along with another inventory draw combined to drive (crude) up", he added.

But the narrowing gap between US and worldwide prices could limit exports, slowing what has been a relief valve for USA production, traders said.

Analysts said that rising oil prices would likely start to have an inflationary effect. This reflected expectations that companies will continue to sell barrels at the current higher price. An involuntary drop in Venezuela's production in recent months has deepened the impact of the output cuts.

Mr. Trump "did attempt yesterday evening to dispel the impression that his government prefers a weak US dollar.but he didn't really succeed, " according to analysts at Commerzbank on Friday.

Money managers hold more bullish positions in crude futures and options than at any time on record, and some investors now appear to be seeking protection against a possible fall in prices.

Refinery crude runs fell by 392,000 barrels per day, EIA data showed.

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