Oil retreats on U.S. output after hitting near 2-yr high

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On Thursday, oil reached its highest level since May 2015, supported by unrest in Iran and the boost in demand because of the cold weather in the United States as well as the ongoing OPEC-led output cuts.

USA crude futures fell 44 cents, or 0.71%, to $61.57 a barrel on the New York Mercantile Exchange.

OPEC and its partners made a decision to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

"Geopolitical risks are clearly back on the crude oil agenda after having been absent nearly entirely since the oil market ran into a surplus in the second half of 2014", Bjarne Schieldrop, chief commodities analyst at SEB, said, also citing Kurdistan and Libya.

Analysts at JBC Energy said the price reaction to the Iranian unrest was overdone, while Swiss bank Julius Baer said prices projected "an overly rosy picture" that left the market at risk of profit-taking. There's no doubt that the ten-dollar move...

Traders are looking to see if Russian Federation - which has faced opposition to the cuts from domestic oil companies - and Opec kingpin Saudi Arabia can agree an exit strategy that will stop a flood of barrels returning to the market.

The market now appears to be re-stabilizing, with Reuters reporting that oil prices have hit their highest-point in two years this week.

The US is poised to supplant Russian Federation and Saudi Arabia as the world's biggest oil producer, ushering in a new era of energy production. They touched $62.21 shortly before, their highest level since May 2015.

US crude stockpiles have also dropped by around one fifth since their peak in March and ended 2017 at their lowest level since October 2015.

While $60-a-barrel crude may temper demand slightly - Brent averaged about $55 a barrel a year ago and $45 a barrel in 2016 - if the world economy keeps growing strongly it will be harder to make a bearish case.

Brent crude futures rose to $68.27 a barrel this morning, a high not seen since May 2015, before edging down slightly to $68.18 a barrel at the time of writing.

The market has been in process of pricing in a ramped-up level of geopolitical risk following the anti-government protests in OPEC member Iran, which has more than offset any concerns about prospects for rising US crude supply.

Brent crude, the worldwide benchmark, was unchanged at as high as $68.2.

OPEC is committed to clearing the global oil gut.

The American Petroleum Institute (API) reported a draw of 4.992 million barrels of USA crude oil inventories for the week ending December 29, marking the fourth straight significant weekly draw to end 2017.

2018 outlook and forecast: The price of Dubai crude is expected to rise this year and trade in the range of $55-60 per barrel.

The spurt in oil prices is definitely not good news for India, which imports over 80% of its crude requirements.