By David Gaffen
NEW YORK (Reuters) - Oil prices on Thursday hit highs not seen since 2014, built on the ongoing drawdowns in global supply and as Saudi Arabia looks to push prices higher, though U.S. crude gave back gains in the afternoon to finish lower.
A global oil glut has been virtually eliminated, according to a joint OPEC and non-OPEC technical panel, two sources familiar with the matter said, thanks in part to an OPEC-led supply cut deal in place since January 2017.
U.S. West Texas Intermediate (WTI) crude futures settled 18 cents lower at $68.29 a barrel after earlier hitting $69.56, their highest since Nov. 28, 2014. WTI has gained nearly 8 percent in the last eight days of trading.
Brent crude futures ended at $73.78 a barrel, up 30 cents. The global benchmark touched $74.75 a barrel, its highest since Nov. 27, 2014 - the day OPEC decided to pump as much as it could to defend market share.
"Overall the supply-demand equation is fairly balanced," said Anthony Scott, managing director at BTU Analytics in Denver. "It depends on expectations at this point - bullishness may be stalling out, and people are asking, 'What's the next leg; you need to see the next signal, whether it's a bullish or bearish signal.'"
Traders said speculators continue to bet on further upside, expecting potential supply disruptions and further drawdowns, driven by strong demand. More than 830,000 front-month contracts changed hands on CME Group's New York Mercantile Exchange on Thursday, compared with a daily average of about 615,000.
Investors are eyeing the $70 level on U.S. crude, but said that would likely face resistance, particularly as the speed and magnitude of the recent rally would augur for selling pressure before long.
"I do think we could see $70 pretty quick, but I want to caution that maybe we'll see the market level out a little bit in a few weeks," said Phil Flynn, analyst at Price Futures Group in Chicago.
The Organization of the Petroleum Exporting Countries' Joint Technical Committee, meeting this week in Jeddah, found that inventories in developed nations in March were at just 12 million barrels above the five-year average, according to a source familiar with the matter.
However, Oman's oil minister, Mohammed bin Hamad Al Rumhi, said he still thinks the oil market is oversupplied.
Reuters reported on Wednesday that Saudi Arabia would be happy for crude to reach $80 or even $100 a barrel, viewed as a sign that Riyadh will not seek changes to the supply pact.
Also supporting prices is the possibility that the United States might reimpose sanctions on Iran, OPEC's third-largest producer, which could result in further supply reductions.
(GRAPHIC: U.S. crude oil production, storage levels - https://reut.rs/2J7QJAY)
(Additional reporting by Shadia Nasralla in London, Koustav Samanta and Henning Gloystein in Singapore, Nina Chestney in London; editing by Marguerita Choy and David Evans)