U.S. West Texas Intermediate (WTI) crude futures had risen to US$61.67 a barrel by 9:22 a.m. ET, 23 cents United States above their last settlement.
US West Texas Intermediate (WTI) crude futures were at $61.62 a barrel at 3.44am GMT, 18c or 0.3% above their last settlement, and not far off the $62.21 May 2015 high reached last week. Baker Hughes on Friday said the USA rig count dropped by five in the last week of the year. OPEC appears determined to end the global supply glut with disciplined output quotas in 2018. Reinstating economic sanctions could limit Iran's oil exports.
A third OPEC source said market fundamentals did not justify the price rally.
According to the U.S. Energy Information Administration, global petroleum and other liquid fuel inventories fell on average for the first year since 2013 last year.
Standard Chartered expects oil demand growth to outpace supply growth from non-OPEC countries in both 2018 and 2019, continuing to be the main supporter of prices, analysts wrote Tuesday.
While OPEC sources say oil market fundamentals remain strong on the back of the supply cuts, others are anxious that economic growth in consuming countries could slow and higher prices might encourage some producers to pump above their output target.
Market bulls have also been buttressed by the Organization of the Petroleum Exporting Countries' continued compliance with a deal to cut crude production.
"If WTI were to go back below the 2017 high of $60.48, which was hit late in the year, and the 2018's opening price of $60.09, then the technical outlook would turn bearish on oil".
Some analysts have said a rise in USA shale oil production could discourage OPEC and Russian Federation to maintain their deal to curb supply until the end of the year for fears of losing market share.
The EIA forecast that US crude oil production will average 10.3 million barrels per day in 2018 and 10.8 million barrels per day in 2019, breaking historical records for annual average production.
"Led by US production, particularly the Permian Basin, and now new oil sands projects in Canada, non-OPEC production is forecast to continue growing through the end of 2019", John Conti, the agency's acting administrator, said in a statement.
Futures extended gains to as much as 1.7% in NY.