Oil steadied in London after briefly climbing above $70 a barrel for the first time in three years as a global surplus recedes.
Brent futures were little changed, having added 2.3 percent this week in a fourth weekly increase. The longest sequence of declines in U.S. crude stockpiles during winter in a decade — a result of rising demand and OPEC’s output cuts — was a key driver of the rally.
Oil has continued to surge this year after posting a second annual advance as the Organization of Petroleum Exporting Countries and its allies keep a tight rein on supply. While the global market is balancing, there are still more than 100 million barrels of surplus inventories that need to be cleared, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
“The market is as bullish as it gets at this point, with little further upside left for now,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo.
Brent for March settlement lost 10 cents to $69.16 a barrel on the London-based ICE Futures Europe exchange at 10:03 a.m., after rising 6 cents on Thursday. The global benchmark traded at a premium of $5.77 to March WTI.
West Texas Intermediate for February delivery was at $63.45 a barrel on the New York Mercantile Exchange, down 35 cents. Total volume traded was about 26 percent above the 100-day average. Prices are up 3.3 percent this week. WTI gained 23 cents to $63.80 on Thursday, the highest close since December 2014.
U.S. crude stockpiles dropped to 419.5 million barrels last week, the lowest level since August 2015, according to the Energy Information Administration. The nation’s oil output fell by 290,000 barrels a day, the most since October, as freezing weather disrupted operations.
“Global oil market fundamentals have reached their healthiest state in several years,” Michael Tran, a commodities strategist with RBC Capital Markets in New York, wrote in a note. “It is premature to expect further upside to be sustainable, at least until the market gains a better grasp of the pace of U.S. production growth.”
China on Friday said it imported a record amount last year, making it the world’s biggest buyer. President Trump has decided to extend sanctions relief for Iran, leaving intact the 2015 nuclear accord that allowed the OPEC member to resume its oil trade in Europe and Asia, according to a person familiar with the matter.