WTI at three-year high above $63 after U.S. stockpiles drop again

Oil traded at the highest level in three years amid the longest stretch of declines in U.S. crude stockpiles during winter in a decade.

Futures in New York advanced 0.6 percent after rising 3.5 percent the previous three sessions. American inventories fell by 4.95 million barrels last week, the eighth consecutive drop, while stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, extended a decline below the five-year average. Output shrank the most since October.

Oil is extending gains after a second yearly advance as the Organization of Petroleum Exporting Countries and its allies trim supply to reduce a global inventory overhang. While U.S. output slid last week, the Energy Information Administration has forecast production will rise above 10 million barrels a day as soon as next month.

“Oil inventories in the U.S. and the rest of the world continue to show ongoing declines,” said Giovanni Staunovo, a commodity analyst at UBS Group AG in Zurich. “Falling inventories are the main driver of the price rally” since last summer, “driven by small supply growth, and strong demand growth.”

WTI for February delivery was at $63.92 a barrel on the New York Mercantile Exchange, up 35 cents, at 11:10 a.m. London time. Total volume traded was about 41 percent above the 100-day average. Prices gained 1 percent to $63.57 on Wednesday, the highest close since December 2014.

Brent for March settlement advanced 29 cents to $69.49 a barrel on the London-based ICE Futures Europe exchange after adding 0.6 percent to close on Wednesday at the highest level since December 2014. The global benchmark crude traded at a premium of $5.70 to March WTI.

U.S. crude stockpiles fell to 419.5 million barrels last week, the lowest level since August 2015, according to EIA data Wednesday. Oil production slid by 290,000 barrels a day to 9.49 million a day.

© 2018 Bloomberg L.P