"Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further", analysts at Commerzbank said, noting, however, that "the higher price level should lead to a further rise in USA shale oil production".
February WTI crude oil futures (DWT)(SCO) contracts rose 0.8% to $60.3 per barrel at 12:45 AM EST on December 29, 2017-the highest level since June 2015. While this puts the company in dire straits when the discount is as large as it is today, it also gives the stock higher leverage to rising oil prices.
Besides the weekly drawdown, the EIA also said that USA oil production dipped to 9.754 million barrels per day, down from 9.789 million bpd the previous week.
OPEC and Russia's efforts to curb oil output, combined with forecasts for strong global demand growth, are expected to keep crude prices close to US$60 a barrel in 2018, a Reuters poll of analysts showed.
Inventories are now down by nearly 20% from their historic highs last March and well below this time a year ago or in 2015.
United States output has surged overall this year, hitting a 46-year high in October when producers pumped 9.6 million barrels a day, according to federal data.
Oil continued its revival from the biggest crash in a generation, with prices set for a second annual gain after a year marked by hurricanes, Middle East conflict and the tussle between Opec (Organization of Petroleum Exporting Countries) and USA shale, said a report. The US expects production to top 10 million barrels a day in the coming year.
There are also expectations in the market that OPEC's next meeting on November 30 will agree to extend cuts beyond the current expiry date in March 2018.
Pipeline outages in Libya and the North Sea have also supported prices.