Oil rally continues

London: Oil prices hit multi-year highs on Thursday despite warnings that a 13 percent rally since early December was close to running its course.

Brent crude futures rose 27 cents to $69.47 a barrel at 1039 GMT, its highest since an intra-day spike in May 2015. US West Texas Intermediate (WTI) crude futures were at $63.94, up 37 cents to their highest since December 2014. Sentiment was boosted by a surprise drop in US production and lower US crude inventories in official data on Wednesday.

“The undeniable fact is that (US) crude oil inventories are at their lowest level since August 2015,” said PVM Oil Associates analyst Tamas Varga.

“OPEC is edging ever closer to its desired target of reducing OECD industrial stocks to the five-year average.”

Data from the US Energy Information Administration (EIA) on Wednesday showed that crude inventories fell by almost 5 million barrels to 419.5 million barrels in the week to January 5.

US production also fell by 290,000 barrels per day (bpd) to 9.5 million bpd, the EIA said, despite expectations of output breaking through 10 million bpd.

The drop, likely to be because of extreme cold weather that halted some onshore output in North America, was expected to be shortlived.