United States oil prices hit highest since mid-2015 on surprise output drop

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West Texas Intermediate crude oil futures finished higher on Thursday.

In November, the Organization of the Petroleum Exporting Countries, along with a group of other major producers outside the cartel including Russian Federation, agreed to extend a deal to cap production through 2018. America has exported almost 1.5 million barrels a day over those three months, roughly triple the year-earlier level.

Barrel is the unit of measurement of oil volume.

Light, sweet crude for February delivery rose 58 cents, or 1%, to $60.42 a barrel on the New York Mercantile Exchange, the highest settle value since June 2015. The number helped ease some concerns about a surge in shale production undermining the oil market's recovery.

While the threat of too much shale production next year still looms, producers are ending the year a lot less gung-ho than they started. Traders showed limited response to yesterday's U.S. Energy Information Administration's (EIA) weekly inventories report.

Close												An oil pump is seen operating in the Permian Basin near Midland in the U.S. state of Texas
Close An oil pump is seen operating in the Permian Basin near Midland in the U.S. state of Texas

Consultancy JBC Energy said Libyan pipeline outages had "no major impact on exports".

WTI has recovered to more than $60 a barrel of late. WTI futures are now up 0.62% at $60.21 per barrel.

Oil prices rose on Wednesday, with US light crude hitting highs not seen since June 2015 after disruptions to a major pipeline dented Canadian deliveries to the United States, where crude inventories were also reported to be falling.

OPEC cuts kicked off last January and are scheduled to continue throughout 2018. The International Energy Agency forecasts that oil demand rose by 1.5 million barrels a day in 2017, and will increase further in 2018 by 1.3 million barrels a day. While gains were driven by glut-shrinking output cuts by the Organization of Petroleum Exporting Countries and its allies including Russian Federation, geopolitical tensions in the Middle East as well as pipeline disruptions from the North Sea to Canada and Libya have also helped. But several factors could work to keep American oil relatively cheap. It ranks first in oil futures trade. America's growing presence as an oil exporter could even become a source of tension with Middle Eastern countries and Russian Federation. "Asian and European refineries are taking steps to be able to handle USA shale oil", according to a Japanese source in the energy sector.

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