Brent crude could hit $70 on US EIA data as oil prices continue to rise

Oil prices rose for the fourth day in a row on Wednesday, with Brent nearing a five-month high of $70 a barrel, driven by OPEC-led supply cuts and US sanctions imposed on Iranian and Venezuelan exports.

Brent futures climbed to a high of $69.96 on Wednesday morning, before falling slightly to $69.68. Meanwhile, West Texas Intermediate (WTI) climbed 9 cents to $62.67.

Breaking $70 level ‘psychologically important’

In an interview with Reuters, PVM oil broker Stephen Brennock said that oil prices breaking through the $70 a barrel threshold is ‘psychologically important’ with the commodity coming close, but ultimately failing to do so over the last few weeks.

‘Underpinning this latest bout of upward pricing pressures is the positive afterglow from surveys pointing to another sizable fall last month in OPEC output,’ he said. ‘Reduced supplies from the producer group will go a long way to cementing the tighter fundamental backdrop’

EIA data could push oil prices above $70 level

Oil prices could well break through the $70 level if official numbers from the US Energy Information Administration (EIA) reveal a reduction in US stockpiles and output, with the organisation scheduled to release its weekly report later on Wednesday.

In a note to investors, Commerzbank said that the EIA could revise down US output, with the agency recording 100,000 barrels a day (bpd) decrease in production in January to 11.9 million bpd.

‘The noticeable decline in drilling activity since the start of the year also pints to less dynamic growth in US oil production,’ the bank said.