Oil rallied on Tuesday, extending gains into a second consecutive session as expectations for an eighth-straight weekly drop in U.S. crude inventories helped send prices to another finish at a three-year high.
February West Texas Intermediate crude CLG8, +0.76% climbed $1.23, or 2%, to settle at $62.96 a barrel on the New York Mercantile Exchange after tapping a high of $63.24. Prices haven’t settled at a level this high since Dec. 9, 2014, according to FactSet data. March Brent LCOH8, +0.49% rose $1.04, or 1.5%, to $68.82 on ICE Futures Europe, also its highest finish since December 2014.
Last week, WTI and Brent scored gains of 1.7% and 1.1%, respectively. A seven-week string of drops in U.S. crude supplies and concerns over unrest in Iran were drivers for the rally. A weekly decline in the number of U.S. drilling rigs led both contracts to also finish higher on Monday.
On Tuesday, a monthly report from the Energy Information Administration raised its 2018 price forecasts on West Texas Intermediate crude to $55.33 and Brent crude to $59.74.
It also lifted its 2018 U.S. crude output forecast to 10.27 million barrels a day, up 2.6% from the December prediction. For 2019, it sees average output of 10.85 million barrels a day. Both would be record annual output levels.
Output from the Organization of the Petroleum Exporting Countries averaged 32.5 million barrels a day in 2017, down 200,000 barrels a day from 2016, the EIA said. It expects OPEC output to rise by 200,000 barrels a day in 2018, partly due to expectations that Libya will maintain “relatively high production” levels.
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