Stockpile declines and Iranian concerns see oil trades near two-year high

US WTI crude futures were at $60.64 a barrel at 7.50am up 22 cents or 0.4% after hitting a June 2015 high of $60.68 earlier in the day

Oil prices posted their strongest opening to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russian Federation.

"Growing unrest in Iran set the table for a bullish start to 2018", the US -based Schork Report said in a note to clients on Tuesday. Heating oil had settled higher on the back of the cold weather hitting a large swathe of the United States.

U.S. West Texas Intermediate (WTI) crude futures settled at $61.63 a barrel, up $1.26, or 2.1 per cent. Global benchmark Brent crude futures were up 89 cents or 1.3% at $67.5 a barrel after touching $67.6 a barrel, the highest since May 2015.

Freezing weather in the United States has boosted demand for heating oil.

"We think USA tight oil production growth warrants close monitoring as it could spoil OPEC's market-balancing efforts, pushing the market into surplus in 2018", Barclays bank said on Tuesday.

Brent could be headed toward $70 a barrel, while USA crude has a shot at breaking into the $65 to $67 range, Kilduff said.

China tightens North Korea trade restrictions under United Nations sanctions
It said the KOTI docked at Yeosu six times and three times in Pyeongtaek between August and December to take on oil. US President Donald Trump has complained that China is allowing oil to go into the North.

FILE PHOTO: A pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013.

The API said distillate stocks rose by 4.3 million barrels, more than expected.

With pipeline outages resolved and protests in Iran showing no signs of affecting its oil production yet, Hansen said prices could fall in early 2018, especially with rising US output.

"The protests don't put crude oil production at risk; from that perspective it is sort of a moot geopolitical factor", said Sarp Ozkan, analyst at in Denver. That's about $12/barrel more than a year ago.

Apart from a spike in May 2015, oil is at its highest since December 2014 - the month after a decision by the Organization of the Petroleum Exporting Countries to stop cutting output to support prices. Compliance has been high, as producers have chose to extend the supply pact until the end of 2018.

"It is only a matter of time before the 10 million barrel per day (bpd) (U.S.) production target will be reached", Hansen said.

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