U.S. oil price tops $65 for first time since 2014

The price of a barrel of North America's crude oil benchmark topped $65 US for the first time since 2014 on Wednesday.

Amount of oil in storage in the U.S. falls for tenth straight week

The price for a barrel of oil topped $65 US a barrel on Wednesday for the first time in more than three years. (Robson Fletcher/CBC)

The price of a barrel of North America's crude oil benchmark topped $65 US for the first time since 2014 on Wednesday, pushed up by new data showing crude inventories have now declined for 10 weeks in a row.

The U.S. Energy Information Administration said Wednesday that the amount of oil in storage in the U.S. fell by more than a million barrels to 411.6 million. That's the 10th consecutive weekly drawdown and a sign that the oversupply that has kept prices down for three years is starting to break.

"This is the lowest level for US crude inventories since February 2015, and is a signal that demand is outpacing supply," researchers at the University of Alberta said in a note.

The price of West Texas Intermediate closed up $1.41, or almost 2 per cent, to $65.88 in New York. That's the highest since December of 2014. 

According to the EIA, oil stockpiles slumped lower at the storage hub of Cushing, Okla., falling to 39.2 million barrels, lowest since January 2015. That's helping push up the price of WTI said Phil Flynn, analyst at Price Futures Group in Chicago, "because Cushing is draining like a cheap canoe."

Robert Johnston, the CEO of The Eurasia Group, told reporters in Calgary on Wednesday that he expects oil prices to range between $65 US and $70 US per barrel in 2018.

"I think what we're seeing now is probably what will continue," he said.

"I was just in the Persian Gulf over the last couple week and it's pretty clear that the Saudis will continue to defend prices and withhold their own market share and production well into 2018, possibly 2019, and that should help support prices, combined with ongoing geopolitical risk -- Libya, Venezuela, Iran -- plus what look to be pretty healthy short-term demand numbers."

While some analysts anticipate rising prices will touch off a wave of U.S. shale oil production that will sink prices, Johnston does not believe current prices are vulnerable to that scenario.

"Basically, the Saudis are ceding market share to the U.S. saying, 'We can handle another million barrels a day of U.S. [oil] as long as the Saudis and Russians are holding their supply back.' I think that will help the market at least stay balanced and continue to draw stocks as well," he said.

"But of course if they change their minds and start chasing market share again, prices could change pretty quickly."

With files from CBC News' Tony Seskus and Reuters