Oil prices rose on Thursday after a survey showed OPEC’s commitment to its supply cuts remains in place.
Brent April crude futures were up 53 cents on the day at 69.42 dollars a barrel by 1150 GMT, while NYMEX crude for March delivery rose 42 cents to 65.15 dollars a barrel.
Brent crude rose by 3.3 per cent in January, its strongest start to the year for five years, in line with a broad rise in other risk-linked assets such as U.S. equities, which hit record highs last month and marked their biggest January increase since 1997.
With investors now pondering which of oil’s current key driving forces will prove to be the dominant one – rising U.S. crude output, or OPEC’s adherence to its supply cuts, the relationship with equities and even the dollar is likely to erode.
“I don’t think it’s durable, that suddenly we see oil and the S&P attached at the hip. They have coincidentally done well and it’s profit-taking.” London Capital Group head of research, Jasper Lawler, said.
“The other factor is that big 70 dollars level in Brent. That is pretty much the top of the range for most forecasts out there. So again, that’s a price level that gives some pause for thought.
“I don’t think we should go back to 60 but I think probably 65 seems like a logical area to … start refocusing on the fundamentals of the market/versus general sentiment.”
Goldman Sachs raised its three-month forecast for Brent to 75 dollars from 62 dollars and its six-month forecast to 82.50 dollars from 75 dollars.
U.S. crude oil production in November surpassed 10 million bpd for the first time since 1970, and neared the all-time output record, the Energy Information Administration said on Wednesday.
The EIA also reported the biggest increase in crude oil stocks since March last year, a rise of 6.8 million barrels.
Output by OPEC also rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela, a Media survey found.
However, adherence by producers included in the deal to curb supply rose to 138 per cent from 137 per cent in December, suggesting commitment is not wavering even as oil prices hit their highest since 2014.