Crude rallied to US$80 a barrel in London for the first time since late 2014 amid signals that stockpiles of excess oil will continue shrinking around the world.

Futures contracts in London and New York both climbed more than 1 per cent on Thursday. Inventories in the world’s biggest economy withered last week amid unprecedented exports of U.S. oil. As for OPEC, leading members have assured traders they have plenty of crude to make up for any losses from sanctioned Iran, though the cartel showed no signs of ramping up output.

The worldwide glut has been eradicated and “OPEC still hasn’t said anything about ending the deal early, which is only good for markets,” said Ashley Petersen, lead oil analyst at Stratas Advisors in New York. As for the U.S., “we’ve been having plenty of exports to kind of alleviate any sort of glut here. There seems to be just enough crude and it’s all finding a home to go to.”

Crude this month has been touching levels last seen more than three years ago as global supplies tighten amid fears over the implications of the Iran nuclear accord break-up. Money managers who are reducing bullish bets on oil are following a “dangerous” strategy, according to Goldman Sachs Group Inc. Demand will remain strong and concerns over economic growth will probably prove temporary, Goldman’s analysts said.

“Supply concerns are top of mind after the U.S. left the Iran nuclear deal,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich. “The geopolitical noise and escalation fears are here to stay.”

Brent for July settlement jumped 42 cents to US$79.70 a barrel on the London-based ICE Futures Europe exchange, after earlier reaching US$80.18, the highest since November 2014. The global benchmark crude traded at a US$7.79 premium to West Texas Intermediate for delivery the same month.

West Texas Intermediate for June delivery climbed 36 cents to US$71.85 at 10:14 a.m. on the New York Mercantile Exchange. Total volume traded was 21 per cent above the 100-day average.

The Energy Information Administration reported on Wednesday that U.S. crude stockpiles declined for a second week, while gasoline inventories fell by the most since early March.

Yet, Total SA Chief Executive Officer Patrick Pouyanne said strong demand can’t be maintained at US$80 a barrel and the oil market is not fully back in balance.