Oil prices dipped on Thursday but stayed close to their highest in 2-1/2 years, as data showed strong demand for crude imports in China and on increased refining activity in the United States that drew more crude from inventories.
Trading was typically thin at year end, with many traders on vacation.
The U.S. Energy Department said crude stocks fell 4.6 million barrels in the latest week. Inventories excluding the nation’s strategic reserve have declined more than 11 percent in the last year.
U.S. refining runs increased, pushing overall capacity use among the nation’s refiners to 95.7 percent, highest in December dating to 1998, according to the U.S. Energy Department. Refiners have profited in recent months as the spread widened between U.S. crude and Brent futures prices.
U.S. West Texas Intermediate (WTI) crude futures CLc1 slipped 13 cents to $59.51 a barrel as of 11:35 a.m. EST (1635 GMT), a day after briefly touching $60 a barrel. Brent crude futures LCOc1 fell 11 cents to $66.33 a barrel.
This week, WTI broke through $60 a barrel for the first time since June 2015, while Brent breached $67 for the first time since May 2015. A Reuters monthly poll showed analysts expect Brent crude to stay close to $60 in 2018. [O/POLL]
Oil markets have tightened after a year of production cuts led by Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia. OPEC cuts kicked off last January and are scheduled to continue throughout 2018.
Countering those cutbacks, U.S. oil production C-OUT-T-EIA has soared more than 16 percent since mid-2016 and is approaching 10 million bpd, trailing only OPEC kingpin Saudi Arabia and Russia.
In the most recent week, U.S. production dipped modestly to 9.75 million bpd from 9.79 mln bpd the previous week.
In early trade, prices were supported by China’s release of strong import quotas for 2018. China’s crude inventories in November hit a seven-year low of 26.15 million tonnes, Xinhua data showed.
Pipeline outages in Libya and the North Sea have also supported prices. Libyan oil supplies were disrupted by an attack on a pipeline this week and flows towards the port of Es Sider were reduced by about 70,000 bpd on Thursday.
In the North Sea, the 450,000 bpd capacity Forties pipeline system was shut this month after a crack was found.
Both pipelines are expected to return to normal operations over the new year or in early January. (Reuters)