Crude oil futures up 1.76% on global cues

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The price of Brent crude oil broke the $71 per barrel level today for the first time since 2014 after USA crude inventories fell for the 10th week in a row and the United States dollar weakened.

The Energy Information Administration yesterday said U.S. crude production rose for a second consecutive week to 9.88 million barrels a day. At 411.6 million barrels, stocks are at their lowest since February 2015.

Economic growth is translating into healthy oil demand growth, which comes at a time that OPEC and Russian Federation lead production cuts aimed at tightening the market and propping up prices.

West Texas Intermediate crude oil climbed above the $65 mark for the first time in more than three years on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were at $64.59 a barrel, up 12 cents from their last settlement and close to a December-2014 high of $64.89 from January 16. Last Monday, they hit their highest since December, 2014 at $70.37 a barrel.

In the NY market, gold prices hovered near four-month highs last Wednesday as the USA dollar slipped against a basket of currencies.

Looming over the generally bullish market has been USA oil production, which is edging ever more closely towards 10 million barrels per day (bpd), hitting 9.88 million bpd last week.

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Gasoline stockpiles are expected to grow by 2.5 million barrels on average, according to analysts.

Reduced flows from the Keystone pipeline from Canada helped drain supply there, along with further outflows from the new Diamond Pipeline.

USA crude stockpiles have been dropping, underscoring the idea that global supply is rebalancing after a glut. In late December, that spread touched US$7 a barrel, which spurred USA exports and reduced imports.

Light crude demand has also risen after China decided in late 2017 to switch to low-sulphur diesel fuel for industrial uses, a third trader said. The contract also touched a new three-year high on Wednesday. An involuntary drop in Venezuela's production in recent months has deepened the impact of the output cuts. Demand for stored supplies in the world's biggest economy has been robust at a time of year when it's usually weakening because of refinery repairs, all against the backdrop of production curbs by OPEC, Russia and other major suppliers.

Trading data shows that open interest, describing the amount of positions that have yet to be settled, for Brent put options to sell at $70, $69 and $68 per barrel has surged since the middle of last week on the Intercontinental Exchange (ICE).

"We still have. nine long barrels for every short barrel, so a reversal should be interesting to watch", he said.

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