Oil slips away from 2015 highs as doubts emerge over rally

Brent crude futures drop 0.3 per cent to $67.88 a barrel

The IEA anticipated US sanctions to drive Iranian barrels out of the market. Photo: AP

Oil prices fell on Friday, dropping away from highs last seen in 2015, as soaring U.S. production undermined a 10-per cent rally from lows hit in December that was driven by tightening supply and political tensions in OPEC member Iran.

U.S. West Texas Intermediate (WTI) crude futures were at $61.81 a barrel at 0750 GMT. That was 20 cents, or 0.3 per cent, below their last close. WTI hit a $62.21 the previous day, which was its strongest since May, 2015.

Brent crude futures were at $67.88 a barrel, 19 cents, or 0.3 per cent, below their last settlement. Brent hit $68.27 the day before, also the highest since May, 2015.

Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher.

“The protests in Iran add more fuel to the already bullish oil market mood,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.

Oil prices have received general support from production cuts led by OPEC and by Russia, which started in January last year and are set to last through 2018, as well as from strong economic growth and financial markets.

That has helped tighten markets. U.S. commercial crude inventories fell by 7.4 million barrels in the week to Dec. 29, to 424.46 million barrels, according to data from the Energy Information Administration (EIA).

That is down 20 per cent from their historic peaks last March and close to the five-year average of 420 million barrels.