Picture: ISTOCK
Picture: ISTOCK

New York — Oil prices edged off highs last reached in late 2014, pressured by a stronger dollar, but crude futures still drew support from mounting political tension in the Middle East and shrinking global oil inventories.

Brent crude futures were at $71.67 a barrel at 3.48pm GMT, down 39c. US West Texas Intermediate (WTI) crude futures were down 13c at $66.68.

"The dollar index is the biggest factor in prices today," said Phillip Streible, analyst at RJO Futures in Chicago. The dollar was up 0.3% against a basket of major currencies, making purchases in other currencies more expensive.

Oil cartel Opec said the global oil stocks surplus was close to evaporating due to healthy demand and its own supply cuts. The group is producing oil below its targets, meaning the world needs to use stocks to meet rising demand.

Opec said in its monthly report that oil stocks in the developed world fell by 17.4-million barrels in February to 2.854-billion barrels, about 43-million barrels above the latest five-year average.

Opec secretary-general Mohammed Barkindo told Reuters in New Delhi that the global oil glut has effectively shrunk by 90% since the start of 2017. "We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400-million barrels to about 43-million above the five-year average," Barkindo said.

Opec, Russia and several other non-Opec producers began trimming supply in January 2017. Their pact runs until the end of the year and Opec meets in June to decide on its next course of action.

"There is growing confidence that the declaration of co-operation will be extended beyond 2018," Barkindo told Reuters. "Russia will continue to play a leading role."

On Wednesday, both Brent and WTI hit their highest since late 2014, $73.09 for Brent and $67.45 a barrel for US crude, after Saudi Arabia said it intercepted missiles over Riyadh and US President Donald Trump warned of military action in Syria.

The geopolitical developments more than offset pressure from a US government report showing crude oil inventories rose by 3.3 million barrels, while domestic production hit a record 10.53-million barrels per day (bpd).