Oil traded near the highest close in more than three years as U.S. crude stockpiles shrank for the seventh week, the longest run of declines since August, offsetting a rebound in production and rally from lows hit in December that was driven by tightening supply and political tensions in OPEC member Iran.
Futures lost 0.4 percent, trimming the weekly gain to 2.3 percent. Crude inventories slid by 7.42 million barrels last week, also the biggest decline since August, according to government data Thursday. Supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate, fell to the lowest since February 2015, while nationwide output expanded to a near record.
Oil is extending gains after climbing more than 12 percent last year as the Organization of Petroleum Exporting Countries and its allies cut output to trim a global glut. However, the recent surge in WTI may lead to expanded U.S. output. The drill rig count will “substantially increase” with crude prices between $61 and $65 a barrel, according to 42 percent of industry executives that responded to a Dallas Federal Reserve survey last month.
“There’s been one-way, very steep and uninterrupted rally off the last minor low in mid-December near $56, so it won’t be surprising to see a pause here,” said Ric Spooner, a Sydney-based analyst at CMC Markets. “Prices are getting into shale oil country and the market may wait for evidence as to whether producers are increasing output or not.”
WTI for February delivery was at $61.78 a barrel on the New York Mercantile Exchange, down 23 cents, at 7:45 a.m. in London. Total volume traded was about 35 percent below the 100-day average. Prices added 38 cents to $62.01 on Thursday, the highest close since December 2014.
Brent for March settlement lost 23 cents to $67.84 a barrel on the London-based ICE Futures Europe exchange after rising 0.3 percent on Thursday to the highest close since December 2014. Prices are up 1.5 percent this week. The global benchmark crude traded at a premium of $6.14 to March WTI.
U.S. crude stockpiles fell to 424.5 million barrels last week, the lowest since September 2015, according to the Energy Information Administration. Oil output rose to 9.78 million barrels a day, increasing for the 10th time in 11 weeks.