U.S. West Texas Intermediate and global benchmark Brent crude oil rose to their highest levels since early 2015 on Thursday, on concern that the escalation of unrest in Iran will eventually have an effect on supply and another decline in U.S. inventories as refining activity hit a 12-year high.
Oil prices have received general support from production cuts led by OPEC and Russian Federation, which started in January previous year and are set to last through 2018, as well as from strong economic growth and financial markets.
"The crude oil inventory number was pretty healthy relative to consensus", Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. Domestic demand was also higher: US product supplied for crude oil and petroleum products was at the highest level since 2007.
Apart from a spike in May 2015, oil is at its highest since December 2014 - the month after a decision by the Organization of the Petroleum Exporting Countries to stop cutting output to support prices. US production rose to 9.78 million barrels in the last week.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $61.40 a barrel by 1140 GMT.
Crude inventories fell by 7.4 million barrels in the week to December 29, compared with analysts' expectations for a decrease of 5.1 million barrels.
Canada, Saudi Arabia, and Venezuela were the largest foreign suppliers of crude oil to the U.S.
That is down 20 percent from their historic peaks last March and close to the five-year average of 420 million barrels.
WTI Crude Oil has indicated a break above the weekly resistance at 59-60, and while that holds, it could well move up to 64.
China's imports at around 8.5 million bpd, already the world's biggest, are expected to hit another record in 2018 as new refining capacity is brought online and Beijing allows more independent refiners to import crude.
The bearish factors were mainly: the U.S. crude oil production growth threat, the rise in United States gasoline and distillate stocks, the pipeline disruptions in the North Sea and Libya being resolved, the end of the holiday demand surge combined with the cold snap in the USA hampering transportation fuels demand, and the USA oil rig count remained strong.