Although analysts and traders have been warning of the risks of a downward price correction since the start of the year, they point out that overall market conditions remain strong, largely due to ongoing production cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.62 a barrel at 0524 GMT - 18 cents, or 0.3 percent, below their last settlement. WTI the day before hit its strongest since late 2014 at $64.77 a barrel.
Brent crude futures LCOc1 were at $69.27 a barrel, virtually unchanged from their last close. Brent also marked a December-2014 high the previous day, at $70.05 a barrel.
“OPEC has acted successfully to reduce the inventory overhang and demand growth remains robust in the short term,” said Sanjeev Bahl, analyst at Edison Investment Research in a 2018 outlook.
The production cuts started in January last year and are set to last through 2018.
“There is potential for oil prices to move higher as inventories normalise,” Bahl said.