Oil trades near two-year high as U.S. stockpiles seen dropping

Brent crude futures, the international benchmark for oil prices, were at $69.72 per barrel at 0008 GMT, down 15 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $64.27 a barrel, down 3 cents.

HONG KONG: Oil traded near the highest close in more than two years before U.S. government data forecast to show stockpiles extended declines for a seventh week and as unrest continued in OPEC’s third-biggest producer.

Futures were little changed in New York near US$60 a barrel after easing 5 cents on Tuesday. Inventories probably fell by 5 million barrels last week, according to a survey before an Energy Information Administration report on Thursday. Crude and condensate exports from Iran remain unaffected by the turmoil that has spread across the country, Bloomberg tanker tracking shows.

Oil last year capped a second annual advance as the Organization of Petroleum Exporting Countries and its allies trim supply to reduce a global glut. Prices will probably trade between US$40 and US$60 a barrel this year, penned in by rising U.S. shale production, declining but still hearty worldwide supplies and eroding OPEC compliance, according to Moody’s Investors Service.

“There’s still upside to the price,” said Daniel Hynes, an analyst at Australia & New Zealand Banking Group Ltd. in Sydney. 

“The market is definitely getting a little more positive about supply and demand dynamics. It’s highly unlikely we’ll see any impact on output from the Iranian protests but it does raise market awareness of rising geopolitical risks.”

West Texas Intermediate for February delivery was at US$60.34 a barrel on the New York Mercantile Exchange, down 3 cents, at 7:40 a.m. in London. Total volume traded was about 45% below the 100-day average. Prices closed at US$60.42 on Friday, the highest level since June 2015.

Brent for March settlement slid 9 cents to US$66.48 a barrel on the London-based ICE Futures Europe exchange after losing 30 cents on Tuesday. The global benchmark crude traded at a premium of US$6.16 to March WTI.

Unrest in Iran began Dec. 28 with a rally against rising prices and the government’s handling of the economy, before turning into a wider protest against the political establishment. The OPEC member pumped 3.82 million barrels a day in November, according to data compiled by Bloomberg. - Bloomberg