Brent crude touches $60 for the first time in two years

Global inventories remain above the five-year average with USA crude adding to existing stockpiles.

Brent fell 38 cents to $58.92 a barrel by 1215 GMT, after Thursday's rise to $59.55, its highest since July 2015 and more than 30 percent above its 2017 lows touched in June. The market was eager that it return sooner than now, but in this sentiment-driven oil price environment, comments from Saudi Arabia convinced investors that the Kingdom was serious about managing supply.

On Tuesday, Saudi Arabian Energy Minister Khalid al-Falih on Tuesday raised the prospect of prolonged output restraint once an OPEC-led pact to cut supplies ends. "We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average".

Crude rose almost 1% on Thursday after Saudi Arabian Crown Prince Mohammed bin Salman indicated that the top oil exporter needed to extend production cuts in order to stabilize markets, suggesting agreement for another nine month extension. Total U.S. crude stockpiles rose by 856,000 barrels, halting four weeks of declines, the EIA said.

Brent's premium over WTI WTCLc1-LCOc1 was up 1.5 per cent on Thursday at US$6.35 amidst renewed strength in the global benchmark.

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The kingdom has been a larger supplier to the USA for most of the past quarter century, data from the Energy Information Administration show.

OPEC and some major producers outside the cartel, including Russian Federation, first agreed late past year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices. Analysts had been expecting a decline in inventories by more than 2.5 million barrels.

The EIA data also showed US oil production had returned to pre-hurricane levels, climbing to more than 9.5 million barrels a day. Gasoline and distillate inventories fell this week, down more than 5 million barrels respectively.

For the week, Brent was 4.6 percent higher, notching its third straight weekly gain. This essential and urgent intent is being welcomed and applauded by all while American production is being watched with caution.

  • Sonia Alvarado