In an effort to tighten markets and prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) and Russia started to withhold production in January last year, and the cuts are set to last through 2018.
This restraint has coincided with healthy oil demand and economic growth, pushing up crude prices by more than 13 percent since early December.
“Oil remains underpinned by the solid economy with strong oil demand tightening global oil inventories. The past years’ surplus supplies are slowly disappearing,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
U.S. crude stocks fell by 11.2 million barrels in the week to Jan. 5 to 416.6 million barrels, industry group the American Petroleum Institute said on Tuesday.
“After years of oversupply, the inventories are contracting much faster than the markets had anticipated,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.
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