Oil Prices Dropped As Investors Took Profits

Oil prices declined on Friday, after rising to seven-year highs this week. Oil prices fell on Friday after an unexpected rise in U.S. crude as well as fuel inventories and as investors took profits.

On Friday, Brent crude futures dropped $1.49 or 1.6% to $86.89 by 10:10 GMT. It earlier declined by as much as 3%, the most since December 20. One day earlier, the global benchmark touched fresh 7-year highs of $89.50 a barrel.

U.S. West Texas Intermediate (WTI) crude futures plunged $1.52 or 1.7% to $84.03 a barrel. It declined as much as 3.2%, also the most since December 20. Two days ago, WTI crude futures reached its highest point since October 2014. 

The recent rally in crude prices lost momentum on Thursday when Brent, as well as WTI, ended the trading session with slim losses. Both of them gained more than 10% this year and are headed for a fifth straight weekly gain. 

Oil prices and important factors

The Energy Information Administration (EIA) reported the first U.S. stock build since November. Gasoline inventories also jumped to an 11-month high, against industry expectations.

Still, analysts expect the pressure on prices to be limited due to supply concerns as well as rising demand.

The Organization for the Petroleum Exporting Countries (OPEC) and its allies are struggling to hit its monthly output increase target of 400,000 barrels per day.

Tensions in the Middle East and Eastern Europe are also heightening fears of supply disruption. 

UBS expects the demand for crude oil to reach record highs this year, and for Brent to trade in a range of $80-90 a barrel for now.

Meantime, Morgan Stanley raised its Brent price forecast to $100/bbl in the third quarter from $90/bbl.