"It's gone. We probably now have the tightest oil market versus supply we've had in at least 10 years", said Phil Flynn, analyst at Price Futures Group in Chicago.
Resource stocks were on a roll in Asia on Thursday as oil prices hit heights not seen since late 2014 and ignited a rally across commodities, though the potential boost to inflation globally also put some pressure on fixed-income assets.
Hussein Sayed, chief market strategist at FXTM, said: "While the elimination of oversupply has been a critical factor pushing oil prices, I still believe there's a significant risk premium being priced in, specifically the fear of supply disruption from the Middle East and possible renewed sanctions on Russian Federation and Iran".
"Some of this restricted (Opec) oil production might start to return to the market", he added.
Talk that Saudi Arabia has its sights on $80 to $100 a barrel of oil again and of more United States sanctions on Russian Federation triggered wild swings in trading of commodities on Thursday, though the potential boost to inflation hit fixed-income assets. US gasoline demand surged to a record high of 9.9 MMbbl a day before the summer driving season when consumption typically peaks.
Compliance has reached 150 percent, according to OPEC, meaning the organization's members have cut production by about 1.8 million barrels per day, 600,000 bpd more than pledged.
Yields on USA two-year Treasuries stood at levels last visited in 2008 at 2.43 percent. "The market still needs support".
Crude futures prices rose to fresh three-year highs on Thursday, as a sharp stock draw in the USA and signals that OPEC could continue production cuts into next year continued to add bullish momentum to the market. "They need higher prices".
The cuts have been even bigger than those specified in the deal, thanks in part to a slide in Venezuelan production due to an economic crisis in the South American country. "This is a temporary phenomenon, so we will get additional pipeline capacity coming on by mid-next year and over the course of the next 12 to 15 months", he said.
The Jeddah meeting of the Joint Ministerial Monitoring Committee is unlikely to change the parameters for assessing the deal's success, Mazroui and other OPEC officials said, and sources see little chance of a major tweak in June.
The ministers are expected to discuss the five-year average inventory metric on Friday, though the JTC has made no recommendations on this, the sources said.