Oil prices have reached almost $70 due to output cuts led by OPEC nations and Russia, as well as strong market demand.
This level has not been witnessed since 2014 when prices began slipping due to a fall in demand as a result of excess supply.
Brent crude futures LCOc1 dropped $1.08 to touch $69.18 a barrel, while US West Texas Intermediate (WTI) crude futures CLc1 dropped 43 cents to reach $63.87, reported Reuters.
In early trading, WTI touched the 2014 December peak of $64.89 a barrel.
Excess supply of oil has been curbed by the initiative taken by OPEC and Russia. The oil producing nations have been curbing production since January 2017 and this plan will last until the end of this year.
Furthermore, there has been a robust oil demand due to high economic growth, in turn increasing crude prices by almost 15% since December.
US bank Goldman Sachs was quoted by the news agency as stating: “This rally has been driven first by robust fundamentals, with strong demand growth and high OPEC compliance accelerating.”
It further added: “We see increasing upside risks to our $62 per barrel Brent and $57.5 per barrel WTI forecast for the coming months.”
Other US banks such as Bank of America Merrill Lynch also have raised their price forecasts.
Bank of America’s Merrill Lynch was quoted by Reuters as stating: “We have updated our supply/demand balances to reflect a faster-than-expected tightening in the global oil market due to improving cyclical conditions, cold winter weather, and higher than expected OPEC compliance.”