Brent crude hits $74 a barrel in three year high
Declining US stocks and ongoing geopolitical tensions provide perfect storm for oil price spike.
Oil prices broke through three year highs yesterday following US government figures revealing depleted inventories in the world’s only superpower and ongoing geopolitical tensions in the Middle East region following the recent military attacks on Syria.
The Energy Information Administration revealed on Wednesday that while US crude levels dropped by 1.1mn barrels, 300,000 fewer than expected, week-to-week, both gasoline and distillates experienced significant falls, surprising analysts with gasoline supplies, for example, dropping 2.7mn barrels more than predicted. The US driving season is also now only a few months away.
Brent crude broke through $74 a barrel on Thursday in early trading, hitting levels not seen since late 2014, while West Texas Intermediate was closing on $69 a barrel.
A Reuters report also suggested that Saudi Arabia, along with Russia the key driver in a group of 24 oil producing nations that has scaled back its daily output by 1.8mn barrels per day over the past 15 months, wants to see crude prices return to around $100 a barrel.
Analysts believe this reveals continued commitment to the present production cut in the face of rising US output. The Brent crude rally also boosted the share prices of oil producers with Royal Dutch Shell gaining 0.5% on London’s FTSE 100.