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U.S. Oil Nears 7-Year High as OPEC Keeps Output Grip Tight Amid Demand Rebound

OPEC leaders, meeting virtually in Vienna, will likely make only modest changes to their agreed output cuts, a move that could push U.S. crude to the highest levels in seven years.

U.S. oil prices traded at the highest levels in nearly seven years Thursday amid reports that OPEC cartel leaders will only make modest changes to their agreed output cuts, adding further upward pressure on crude markets as demand continues to surge.

OPEC leaders, as well an non-member allies such as Russia, agreed to sweeping production cuts in 2016 -- when oil was trading at around $30 a barrel -- that have taken millions of barrels from the market each day and spark a run on prices this year that's coincided with a post-pandemic rebound in industrial demand.

Reports from today's meeting, held virtually from its headquarters in Vienna, suggest the so-called OPEC+ group will only pare its current holdback of 5.8 million barrels per day by around 500,000 barrels per day, each month, between now and the end of the year.

At the same time, U.S. crude stockpiles are declining at a record pace, with Energy Department data showing the Strategic Petroleum Reserve's total falling by 1.15 million barrels per day over the past month. Overall crude supplies fell by 6.72 million barrels last week, the Energy Department said, taking stocks to the lowest levels since March of last year.

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Meanwhile, industrial demand is surging: European factory activity rebounded to its strongest pace on record last month and similar all-time highs noted in surveys from the U.S. and Asia.

WTI crude futures for August delivery, the benchmark for U.S. oil and gas prices, jumped $2.51 higher on the session, following a 10% gain over the month of June, to trade at $75.98 per barrel, near to the highest levels since November of 2014.

Brent crude contracts for September delivery, which are more tightly-aligned to global prices, were marked $1.92 per barrel higher at $76.54 in early trading in New York, the highest since October of 2018.

Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report shares, meanwhile, were marked 0.5% higher in early trading at $63.40 each while its larger rival, Chevron  (CVX) - Get Chevron Corporation Report, rose 1.7% to $106.50 each.