Oil climbs above $65 for first time in more than three years

Over the long-run, the markets should continue to be supported by nearly full-compliance with the OPEC-led plan to cut production, trim the global supply and stabilize prices.

Worldwide benchmark Brent crude rose 59 cents, or 0.8 percent, to $70.55 by 2:28 p.m. ET.

U.S. West Texas Intermediate (WTI) crude futures were at $64.43 a barrel, down 4 cents from their last settlement. It rose as high as $70.43 on Wednesday, setting a fresh three-year high.

The Energy Information Administration (EIA) yesterday said USA inventories had fallen to 411.6m barrels, the lowest since February 2015.

In Europe, crude oil futures also traded higher during the late trading session on Tuesday on the improved global economic outlook as the market looked forward to the release of United States crude stocks data.

The report shows the 1.8 million barrels per day (MMBPD) production reduction agreed to by most of OPEC and a group of non-OPEC producers led by Russian Federation was working to cut the crude glut worldwide.

The U.S. dollar index hit a new three-year low on Wednesday after Treasury Secretary Steven Mnuchin said a weaker greenback is good for the country.

John Kilduff, founding partner at Again Capital, noted that "Underpinning this is this weakened dollar: it's an incredible move in the dollar that's propping up commodity prices in general". Oil inventories at the key Cushing, Oklahoma, pipeline hub fell to the lowest level since January 2015, while gasoline stockpiles climbed for an 11th week and distillate stockpiles also increased, according to the government. Still, he pointed to rising product inventories as a potential bearish signal.

The banks says the long-oversupplied oil market is tightening up more quickly than expected as global economic growth fuels demand and output cuts by Opec, Russia and several other producers eat into the world's crude stockpiles.

Total products supplied over the past four-week period averaged 20.5 million barrels per day, up by 8.1 percent from the same period of a year ago.

- There's an acceptance that the OPEC-led deal should extend beyond 2018, Falih said.

US output has grown by more than 17 percent since mid-2016, and is now on par with that of top exporter Saudi Arabia.

DBS Vickers Securities is maintaining its "overweight" stance on the oil and gas (O&G) sector given the recent oil price rally, which has driven up O&G stocks to directly benefit oil majors leading the rally.

  • Eleanor Harrison