Oil prices declined on Friday, moving away from a three-year high the day before as some investors cashed in this week’s gains, while others reflected on uncertain US inventory data.
March contract Brent crude, the global benchmark dropped 0.7 percent to $67.58 per barrel. It reached its highest since May 2015 of $68.27 on Thursday.
US West Texas Intermediate (WTI) futures for February delivery also fell by 0.9 percent to $61.41. WTI marked its strongest gain of $62.21 in the previous day as well.
Prices hit a three-year high on account of declining US crude supplies and political tensions in Iran.
However, commodity analyst Giovanni Staunovo said that the drop today is more related to profit taking following a good week.
Staunovo added that the market could also be reassessing petroleum stocks figures released on Thursday by the US Energy Information Administration (EIA).
Oil Price Rally Unsure to Last
Even though Iran’s oil output appeared to be unaffected by the issue, and US production would eventually add more than 10 million bpd, doubts on whether the crude rally can last and concerns over progress in electric vehicles will weaken longer-term demand for oil still troubles the sector.
A US-based investment firm saw the oil price upsurge to be unapparent. But added that they believe the market will remain short in supply throughout this year.
Analyst Norbert Rücker said that oil prices going beyond $60 per barrel project a very optimistic image as output disruption in Iran remains a distant threat.
Rücker added that with disruptions in North Sea removed, and with crude production beating 2015 highs in October, it is on track to record gains this year.
US Oil Supply Fall, Gasoline and Distillate Stocks Rise
Crude stockpiles were down 7.4 million in the week to December 29 to 424.46 million barrels per day (bpd).
That is 20 percent less from their record peaks in March and near the five-year average of 420 million barrels.
Crude inventories dipped mainly due to a sharp decline in demand, as a seasonal lull in demand started strong.
Gasoline supplies and distillates on the other hand increased 4.8 million and 8.9 million bpd respectively.
Buildup in distillates was the largest weekly rise over the past year. A drop in domestic consumption as well as a fall in exports contributed to the increase.
Extreme weather conditions in the US Northeast should boost demand and solve spreads for distillates, analysts said.
EIA is set report on January 9. The agency is expected to provide details regarding its outlook for 2019 and the suggestions for US crude output.