Oil Prices Edge Lower, But Hold Near 3-Year Highs

Investing.com – Crude prices edged lower in early dealings on Tuesday, but held near their highest level since late 2014, amid optimism over ongoing efforts by major producers to cut output to reduce a global glut

futures, the benchmark for oil prices outside the U.S., were at $69.92 a barrel by 3:25AM ET (0825GMT), down 34 cents, or 0.5%, from their last close. The contract reached $70.37 on Monday, its best level since Dec. 2014.

Meanwhile, U.S. West Texas Intermediate (WTI) tacked on 15 cents, or 0.2%, to $64.44 a barrel. It rose to its highest since Dec. 2014 at $64.89 a day earlier. The U.S. benchmark did not settle on Monday due to the Martin Luther King Day holiday.

Oil prices notched a fourth week of gains in a row last week amid indications that OPEC-led output cuts are draining the market of excess supplies.

Futures have added around 13% since early December, benefiting from production cut efforts led by the Organization of the Petroleum Exporting Countries and Russia. The producers agreed in December to extend current oil output cuts until the end of 2018.

The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once.

However, analysts and traders have warned that the recent rally could encourage U.S. shale oil producers to as they look to take advantage of higher prices.

The number of oil drilling rigs climbed by 10 to 752 in the week to Jan. 5, data from General Electric (NYSE:)’s Baker Hughes energy services unit showed, the first increase to drilling numbers in five weeks.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Wednesday and Thursday to further weigh what the impact of recent storm activity was on supply and demand.

The reports come out one day later than usual due to the Martin Luther King Day holiday on Monday.

Oil traders will also focus on monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency to assess global oil supply and demand levels.

The data will give traders a better picture of whether a global rebalancing is taking place in the oil market.

In other energy trading, shed 0.5% to $1.848 a gallon, while gained 0.5% at $2.094 a gallon.

declined 7.7 cents, or 2.4%, to $3.123 per million British thermal units. It soared nearly 15% last week, after data showed the largest withdrawal on record in U.S. supplies in storage.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.