Oil prices near 3-year highs, supported by healthy demand

LONDON: Brent crude oil dipped on Tuesday but remained near $70 a barrel, a level not seen since 2014's dramatic market slump.

Prices have been driven up by oil production curbs in OPEC nations and Russia, as well as strong demand thanks to healthy economic growth.

Brent crude futures fell 54 cents, or 0.77 percent, to $69.72 per barrel by 1018 GMT. Traders said Brent was well supported overall at around $70.

Brent hit $70.37 on Monday, a high from December 2014, when markets were at the beginning of a three-year decline.

US West Texas Intermediate (WTI) crude futures were at $64.18 a barrel, down 12 cents, or 0.19 percent. WTI hit a December 2014 peak of $64.89 a barrel in early trading.

"The market is hitting technical resistance. We need to see a confirmation of a true break past $70 a barrel," Olivier Jakob of Petromatrix consultancy said.

"There is lots of speculative length in WTI at the moment ... the force is from the US market right now so we need the direction they give coming back from holiday."

Trading was thin on Monday due to a holiday in the United States.

Oil has been pushed higher by an effort led by the Organization of the Petroleum Exporting Countries and Russia to withhold production since January last year. The cuts are set to last through 2018.

The restraint has coincided with healthy oil demand, pushing up crude by almost 15 percent since early December.

"This rally has been driven first by robust fundamentals, with strong demand growth and high OPEC compliance accelerating," US bank Goldman Sachs said in a note.

"We see increasing upside risks to our $62 per barrel Brent and $57.5 per barrel WTI forecast for the coming months."

Other US banks, including Bank of America Merrill Lynch and Morgan Stanley, have already upped their price forecasts.

A major factor holding back crude prices in 2017, the surge in US production, has stalled at least temporarily as icy winter weather in North America has shut some facilities.

Instead of hitting 10 million barrels per day this month, as widely expected, US production fell from 9.8 million bpd in December to 9.5 million bpd currently.

However, most analysts still expect US production to break through 10 million bpd soon.