Oil hovered below a three-year high near $70 a barrel this morning on signs that production cuts by OPEC and Russia are tightening supplies, but Reuters reports analysts are warning of “red flags” due to surging U.S. production.
International benchmark Brent crude was trading 12 cents lower at $69.75 as of 9:30 a.m., having risen above $70 earlier in the session. U.S. West Texas Intermediate crude was unchanged at $64.30 a barrel. Trading was relatively slow due to the Martin Luther King holiday.
A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong tailwind to oil prices, with both benchmarks last week hitting levels not seen since December 2014.
Growing signs of a tightening market after a three-year rout have bolstered confidence among traders and analysts that prices can be sustained near current levels.
A number of analysts have warned that the 13% rally since the start of the year could peter out in the short term due to global refinery maintenance and rising North American production. Read more.
