Crude Oil Soars Above USD63 For 3-Year High

United States crude stockpiles at the Cushing, Oklahoma, pipeline hub probably fell by 1.5 million barrels last week, according to a forecast compiled by Bloomberg.

Benchmark Brent crude rose further above $68 a barrel on Tuesday, supported by oil output cuts led by the Organization of the Petroleum Exporting Countries and allies including Russian Federation that are due to run until the end of 2018.

"You're so long this market at this point, you could certainly get more interest at these levels", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. OPEC appears determined to end the global supply glut with disciplined output quotas in 2018.

Late Tuesday, trade group the American Petroleum Institute will release figures on domestic petroleum supplies, followed by Wednesday's EIA figures.

Iran said on Tuesday that OPEC members were not keen on increased prices.

OPEC has no formal target for oil prices.

Supply reports this week from industry group the American Petroleum Institute and the US government's Energy Information Administration are expected to show USA crude stocks fell 3.9 million barrels, an eighth week of decline.

OPEC officials also think the 2018 rally has been mainly driven by unrest in Iran, rather than a tighter balance between supply and demand, giving rise to concern it may not last.

The EIA forecast that USA crude oil production will average 10.3 million barrels per day in 2018 and 10.8 million barrels per day in 2019, breaking historical records for annual average production.

However, some analysts believe market participants are getting to optimistic, especially given expectations for an increase in USA shale production.

The surge comes as a welcome boost for the revenues of oil-producing nations, many still reeling from a price collapse that started in mid-2014 when crude began to fall steeply from above $100 per barrel due to oversupply.

However, Innes added that Middle East turmoil would remain a key focus for oil markets and had the potential to "send oil prices rocketing higher". Only top producers Russian Federation and Saudi Arabia produce more.

The rise in prices is expected to drive gains in USA production during 2018, offsetting curbs by others.

  • Eleanor Harrison