Oil prices have reached their highest levels in more than three years on account of a decline in US crude stockpiles and Saudi Arabia’s continuing support for stabilising the markets.
Based on information from the Energy Information Administration (EIA), the US commercial crude stocks decreased by 1.1 million barrels in the week ending 13 April, to 427.57 million barrels.
Brent crude oil futures attained a new high since 27 November 2014, soaring 39 cents, or 0.5%, to reach $74.02 per barrel, according to Reuters.
Following a similar growth trajectory, the US West Texas Intermediate (WTI) crude futures jumped 28 cents, or 0.4%, to trade at $68.75 a barrel.
OCBC analyst Barnabas Gan was quoted by the news agency as saying: “The rally is due to the stock data last night and risk premiums from geopolitical tensions in the Middle East over the last few weeks, but these risk premiums are quite short-lived and investors will likely be normalising prices lower again as the tensions ease.
“I think oil prices are a little elevated in the short term and we would need to have clear signs for improvement in fundamentals.”
A meeting between the Organisation of the Petroleum Exporting Countries (OPEC) and its partners is scheduled for 20 April in Jeddah, Saudi Arabia.
Subsequently, OPEC is expected to hold another meeting on 22 June this year to review its oil production policy.
The oil producers group, comprising Saudi Arabia-led OPEC and Russia, have been engaged in output cuts to tackle supply excesses in the market.
Saudi Arabia is inclined to continue the supply reduction deal beyond the agreed period of until the end of this year in order to achieve higher oil prices in the region of $80 or even $100 a barrel.
Futures brokerage AxiTrader chief market strategist Greg McKenna was quoted by the news agency as saying: “The Saudis and their colleagues in OPEC need higher oil for their fiscal positions and the Kingdom is on a bold – and costly – reform programme.
“So they might continue to squeeze the lemon while they have the chance.”
Support for oil prices also comes from a potential reintroduction of US sanctions against Iran as the move is expected to affect supplies, resulting in a rise in prices.