Washington — Front-month ICE Brent topped $70/b briefly Thursday for the first time since December 2014, but couldn't hold above that mark. The March contract settled at $69.26/b, up 6 cents.
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Related article -- Crude futures: Oil consolidates as market awaits Iran sanctions decision
The oil market's attention has shifted to Washington, where President Donald Trump faces a Friday deadline on whether to continue waiving oil-related sanctions that were lifted by the Iran nuclear deal.
Secretary of State Rex Tillerson told reporters Thursday that Trump will likely decide on the matter that afternoon, following a White House meeting.
"The pending decision from the White House on Iranian sanctions continues to loom large over the market, making it seem easy for prices to continue along on their bullish trend lines for a seventh straight month," TAC Energy said.
Tension with Iran has helped fuel an oil rally that has lifted crude futures to their highest levels in more than three years.
NYMEX February crude settled 23 cents higher Thursday at $63.80/b, the highest level for the prompt contract since December 2014.
Relative to ICE Brent, NYMEX crude has also reduced its discount, gaining ground on data showing US crude stocks have fallen eight straight weeks.
In addition, inventories at Cushing, Oklahoma -- the delivery point for the NYMEX crude contract -- have fallen eight of the last nine weeks to 46.5 million barrels, the fewest since February 2015.
The ICE Brent/WTI spread fell Thursday for the fourth straight session, hovering near the bottom end of its recent range. That spread was $5.58/b in the afternoon, narrowed from $5.78/b Wednesday and $6.21/b Friday.
Strong compliance by producers with the OPEC-led supply cuts also helped tighten the global market, contributing to this dynamic.
But with oil flirting with $70/b, analysts are asking whether OPEC producers will be able to resist the temptation to pump more oil.
"The significant price increase and high price level present a quandary for OPEC countries: higher revenues mean more money flowing into the public purse in the short term, yet OPEC risks losing market shares to US shale oil producers in the medium to long term," Commerzbank analysts said.
Suhail al-Mazrouei, UAE energy minister and current OPEC president, said Thursday that OPEC remains "committed to maintaining strong compliance" with the group's output cuts through 2018.
For US crude producers, this higher oil price environment also raises the question of whether they too will try and increase output.
Some observers feel that US oil companies might actually disregard the urge to spend more for drilling, exercising greater caution in an attempt to shore up their finances.
The next round of quarterly earnings reports, which begins in about two weeks, will reveal the latest projections on capital expenditures.
One aspect of the oil rally that has actually worked to the detriment of oil producers has been the shift in NYMEX crude term structure from contango to backwardation.
Oil producers benefited from contango when they rolled over their short position, but since last week NYMEX crude's nearby structure has been backwardated for the first time in more than three years.
NYMEX crude's February/March spread settled Thursday at 12 cents/b, in from 15 cents/b Wednesday.
Refined product futures were little changed Thursday. NYMEX February ULSD settled 40 points lower at $2.0767/b. NYMEX February RBOB rose 43 points to settle at $1.8370/gal.