April 19 (UPI) -- Crude oil prices continued their rally to test multi-year highs Thursday amid signs of higher demand, despite concerns about future economic growth.
Crude oil prices rallied more than 3 percent in Wednesday trading after the U.S. Energy Information Administration reported domestic crude oil inventories dropped by 1.1 million barrels and gasoline supplies fell by nearly 3 million barrels, indicating the market is getting increasingly tight.
The drain on U.S. supplies came despite a steady increase in output from a country that's on pace to become the largest crude oil producer in the world.
"Stronger refinery runs and lower net imports are offsetting higher production year-on-year, helping to draw down inventories," Matthew Smith, the director of commodity research at ClipperData, told UPI.
The EIA metrics suggest U.S. oil production isn't undermining the effort by the Organization of Petroleum Exporting Countries to tighten the market as much as expected. Now in its second year, the OPEC-led balancing act is credited in part with this year's rally for crude oil prices.
"While many are thinking that the sharp rise in the price of oil is an overnight sensation, the reality is that this is a bull market that has been years in the making," Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in market commentary emailed to UPI.
Crude oil prices yesterday hit their highest mark since late 2014. The price for Brent crude oil was up 1.2 percent as of 9:15 a.m. EDT to $74.39 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.86 percent to $69.06 per barrel.
A report Thursday from consultant group IHS Markit supported the data-fueled rally in crude oil prices. Global growth in gross domestic product is expected at around 3.4 percent in 2018 and 2019 and with that comes a surge in demand.
"Current global total liquids oil demand growth is at similar levels to what was recorded during the 2003 to 2007 commodity super-cycle, referred to as the 'golden age' of refining," the report read.
In the so-called Beige Book, the Fed said the outlook was generally positive, though various economic sectors were showing anxiety over imposed or proposed tariffs from China and the United States. Steel prices in particular have increased sharply and some businesses were passing those higher costs onto their customers.
Meetings kick off Thursday for the annual Spring Meeting of the International Monetary Fund. The IMF said earlier this week it was optimistic in general about the pace of global economic growth, though that growth could be derailed prematurely by trade tensions.
"Escalating trade conflicts and financial market volatility highlight downside risks beyond the next several quarters," the IMF warned Thursday.