Analysts also pointed to an expected demand slowdown at the end of winter in the northern hemisphere and excessive long positions in financial oil markets as a likely brake on any upward momentum in prices.
Finally, a statement by Russia's energy minister highlighting his concern that the market is not completely rebalanced, and a perception that the market continues to be vulnerable to various geopolitical risks added to the bullish outlook. The oil market still isn't fully re-balanced, though ministers from the Organisation of Petroleum Exporting Countries and allied producers agreed yesterday in Muscat that their cuts pact is working, he said.
Opec and its allies see merit in maintaining their output limits into 2019, Oman Oil Minister Mohammed Al Rumhy told reporters before the monitoring committee's meeting. United States crude production stands at 9.9 million barrels a day, the country's highest level in nearly 50 years, according to the IEA. However, Total products supplied over the last four-week period averaged 20.5 million barrels per day, up by 5.6 percent from the same period of past year.
The oil producers will officially review their agreement in June and may start to cut quotas in the second half of the year. That level of supply puts the US neck-and-neck with OPEC kingpin Saudi Arabia - the world's second-largest producer after Russian Federation.
Domestic crude inventories are on the decline, down more than 6 million barrels last week to stand at 412.65 million barrels. It also lifted its 2017 global demand estimate to 96.99 million barrels a day and forecast 2018 demand at 98.51 million barrels a day. Production of the fuel averaged 9.7 million bpd last week, up from 9.5 million bpd in the week to January 5. At the same time, the IEA forecast for global oil demand to remain unchanged at 1.3 month over month barrels per day.
Despite a plunge in US commercial crude inventories, oil prices slipped to settle at $63.95 a barrel in NY, down 2 cents, as traders resurrected an old, but persistent concern that increasingly efficient shale drillers will ramp up output and overwhelm OPEC's efforts to curb production.
"The oil market is volatile".
Crude futures for Brent and West Texas Intermediate also recorded remarkable growth a year ago, with the global benchmark increasing 22%, to roughly $55/Bbl, and the US benchmark growing by 18%, despite a significant increase in USA oil production. In the past such agreements have tended to amount to little as Opec members have often cheated on production quotas to maximise revenues.
OPEC supply cuts were driven in part by a production collapse in crisis-hit Venezuela, which communicated a year-on-year production fall of around 13% in 2017, representing the world's largest unplanned drop in production for the year. As of early Friday, Brent was trading closer to $69 per barrel.