Oil steady near two-year highs, U.S. supply increase caps rise

The Brent oil price was steady at close to two-year highs on Monday, with support from Middle East tensions and record long bets by fund managers balanced by rising U.S. production.

Benchmark Brent crude futures were down a modest 5 cents at $63.47 a barrel by 1228 GMT but up 14 percent so far this month. U.S. West Texas Intermediate (WTI) crude futures rose 6 cents to $56.68.

Traders said crude prices were well supported as output cuts led by the Organization of the Petroleum Exporting Countries and Russia have contributed to a reduction in excess supply that had dogged markets since 2014.

The level of inventories held by industrialized above the five-year average "has fallen by more than 50 percent in 2017, with inventories currently at around 160 million barrels," consultancy Timera Energy said.

"If current trends continue, inventories are likely to return to the five-year average at some stage in 2018," it said, adding that strong demand had also helped reduce the glut.

OPEC has sought to push stocks to the five-year average