Crude futures settled higher on Wednesday, recouping losses as investors awaited key data on the supply of crude around the world.
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Light, sweet crude for February delivery gained 24 cents, or 0.4%, to $63.97 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 23 cents, or 0.3%, to $69.38 a barrel.
In recent weeks, oil prices have repeatedly hit three-year highs on the back of geopolitical turmoil in key producing regions and efforts by the Organization of the Petroleum Exporting Countries and some producers outside the cartel to reduce output.
To address a global glut that weighed on prices for years, OPEC and its allies, including Russia, agreed in November to further extend the production cuts negotiated in 2016 until the end of 2018, with a review period in late June. The deal had been set to expire in March.
Investors are looking forward to data that will shed light on the state of the oil market after more than a year of supply cuts.
The U.S. releases official data on its output and OPEC will publish its monthly oil market report Thursday, while the International Energy Agency will release its closely watched oil market report Friday.
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In addition, traders are awaiting figures from the U.S. Energy Information Administration on the amount of crude oil in storage, due Thursday. Analysts and traders surveyed by The Wall Street Journal expect, on average, that crude stockpiles declined by 2.3 million barrels in the week ended Jan. 12.
The American Petroleum Institute, an industry group, said late Wednesday that its own data for the week showed a 5.1-million-barrel decrease in crude supplies, a 1.8 million-barrel rise in gasoline stocks and a 609,000-barrel increase in distillate inventories, according to a market participant.
Analysts warn Brent may have trouble sustaining a move above $70 a barrel as investors who are betting on even higher prices clash with producers bracing for lower prices.
"You still have some speculators that are aiming for prices going higher but you will also find the resistance from some producers that are hedging," said Olivier Jakob, managing director of Petromatrix, an oil research firm in Switzerland.
Analysts said OPEC shouldn't declare its mission accomplished too early and abandon its production cuts, as higher crude prices may stimulate increased shale oil production.
The Energy Information Administration has projected that U.S. oil production may reach 10 million barrels a day in February.
"Thus OPEC has no scope for expanding production," said Commerzbank analysts in a recent note. "It is therefore too early for OPEC to decide on any premature (gradual) exit from the production cuts, even though rumors claim that this is already being discussed."
And as prices rise, some consumers might reduce their intake in response, analysts said.
"The focus has been on how higher prices will affect production but there has not been a lot of focus on what the higher prices will do to demand," said Mr. Jakob from Petromatrix. "I would start to be a bit more conservative about consumption."
Gasoline futures rose 1.1%, to $1.8584 a gallon, and diesel futures rose 0.3%, to $2.0691 a gallon.
--Stephanie Yang contributed to this article.
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(END) Dow Jones Newswires
January 17, 2018 17:27 ET (22:27 GMT)