Oil hits $71 for first time since 2014 on tighter supply and weak dollar
LONDON - Reuters
The Organization of the Petroleum Exporting Countries and allies including Russia began to curb supplies in 2017. An involuntary drop in Venezuela’s output in recent months has deepened the impact of the curbs.
U.S. crude climbed to $66.44, also the highest since early December 2014, before dipping to $66.05, up 44 cents.
In a further sign the glut is clearing, U.S. crude inventories fell for a record 10th straight week to the lowest since February 2015, official figures showed on Jan. 24.
Also supporting oil, the U.S. dollar hit its lowest since December 2014 against a basket of other currencies. U.S. Treasury Secretary Steven Mnuchin said on Jan. 24 a weaker dollar was “good for us.”
A falling dollar makes dollar-denominated commodities cheaper for other currency holders and tends to support oil prices.
“The depreciation of the U.S. dollar is also allowing oil prices to make further gains,” said Carsten Fritsch, analyst at Commerzbank. “Almost every commodity class is being driven up by this extended dollar fall.”
U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) in February, on the way to a record ahead of previous forecasts, according to the U.S. government’s Energy Information Administration.