Oil prices rallied to a three-year high, since December, 2014, boosted by a record 10th straight weekly decline in U.S. crude inventories.
International benchmark Brent futures were nudging 71 dollars per barrel Both crude benchmarks are up by almost 60 per cent since the middle of last year.
U.S. West Texas Intermediate (WTI) crude futures climbed to 66.22 dollars per barrel in early trading, also the highest level since early December, 2014.
Price support has also been coming from supply restrictions led by a group of producers around the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, which started last year and are set to last throughout 2018.
“The Saudi’s and Russians continue to work together to talk the oil market higher and last night, the countries’ two oil ministers said they were working together on other longer-term projects as well,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
“That, and the USD fall, along with another inventory draw combined to drive (crude) up,” he added.
U.S. crude inventories C-STK-T-EIA fell 1.1 million barrels in the week to Jan. 19, to 411.58 million barrels, the Energy Information Administration (EIA) said on Wednesday.
That’s the lowest seasonal level since 2015 and below the U.S. five-year average around 420 million barrels.
In foreign exchange markets, the U.S. dollar hit its lowest level since December, 2014 against a basket of other leading currencies.
A weakening dollar often results in financial traders taking investment out of currency markets and into commodity futures like crude.
Analysts said that rising oil prices would likely start to have an inflationary effect.
Looming over the generally bullish oil market has been U.S. oil production, which is edging ever more closely towards 10 million barrels per day (bpd), hitting 9.88 million bpd last week.
U.S. output has grown by more than 17 per cent since mid-2016, and is now on par with that of top exporter Saudi Arabia.
Only Russia produces more, averaging 10.98 million bpd in 2017.