Oil prices rose on Wednesday to new two-and-a-half year highs as robust output in the United States and Russia balanced tensions from a sixth day of unrest in OPEC member Iran.
It would be recalled that the U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.87 a barrel at 1241 GMT, up 49 cents from their last close and their highest level since June 2015.
Brent crude futures LCOc1 – the international benchmark for oil prices – were at $67 a barrel, up 43 cents but still trailing Tuesday’s high of $67.29 that was the most since May 2015.
Carsten Fritsch, an analyst at Commerzbank, warned that prices faced a correction as support lent by unrest in Iran will weaken unless the situation begins to affect oil production, which is not yet the case, or the United States re-imposes sanctions.
“It’s surprising that prices remain at such elevated levels near two-and-a-half year highs despite the main cause of the recent rally disappearing,” Fritsch said, referring to the restart of the North Sea Forties pipeline system. Commerzbank predicts Brent will see out 2018 at $60 a barrel.
Traders said markets had recently overshot as U.S. production is set to rise further and doubts are emerging about whether demand growth can continue at current levels.