Oil hits highest since November 2014

NEW YORK — Oil prices rose about 2 per cent on Friday, with US crude hitting its highest in more than three years, as global supplies remained tight and the market awaited news from Washington on possible new US sanctions against Iran.

Bob Yawger, director at Mizuho, noted the looming May 12 deadline that US President Donald Trump had set for Europeans to "fix" the deal with Iran over its nuclear programme or he would refuse to extend US sanctions relief for Iran.

"You have the May 12 Iran and Trump headlines that support the market," he said.

US light crude settled up $1.29 at $69.72 a barrel. It touched a session peak of $69.97 for the first time since November 2014. It was on track to gain just over 2.3 per cent on the week.

Brent crude oil settled up $1.25 at $74.87 a barrel. The global benchmark was set to end the week up 0.3 per cent.

Iran's foreign minister said on Thursday that US demands to change its 2015 agreement with world powers were unacceptable. Trump has said European allies must rectify "terrible flaws" in the international accord by May 12.

European powers want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting EU-Iranian business ties if Trump makes good on his threat to withdraw.

Iran resumed its role as a major oil exporter in January 2016 when international sanctions were lifted in return for curbs on Tehran's nuclear programme.

ANZ analysts Daniel Hynes and Soni Kumari said Brent could reach $80 a barrel by the end of this year, attributing recent strength to rising geopolitical risks and tighter global supply.

"We expect the market to tighten even further in second half 2018," they wrote in a note to clients.

Still, growing US crude supplies have been capping price gains.

Surging production in the Permian shale basin is outpacing pipeline capacity, while local refining issues have exacerbated oversupply.

The United States now produces more crude oil than top exporter Saudi Arabia, and two weeks of US inventory builds have limited the oil market's upside. US energy companies added oil rigs for a fifth straight week, with higher crude prices boosting profits and pushing nationwide production to record highs.

Drillers added nine oil rigs in the week to May 4, bringing the total to 834, the highest since March 2015, General Electric Co.'s Baker Hughes energy services firm said. 

Hedge funds and other money managers cut their net long US crude futures and options positions in the week to May 1, the US Commodity Futures Trading Commission said on Friday.