By Devika Krishna Kumar
LONDON (Reuters) - Oil prices rose about 2 percent on Wednesday to the highest in 2-1/2 years, with a sixth day of unrest in OPEC member Iran and strong economic data from the United States and Germany spurring buying.
Iran's elite Revolutionary Guards have deployed forces to three provinces to put down anti-government unrest, their commander said on Wednesday. Six days of protests have left 21 people dead.
U.S. West Texas Intermediate (WTI) crude futures were at $61.62 a barrel, up $1.23, or 2.1 at 2:08 p.m. EST, just off the session high of $61.67, highest since June 2015.
International benchmark Brent crude futures were up $1.13 or 1.7 percent at $67.71 a barrel after touching $67.84 a barrel, highest since May 2015.
"While the Iran tensions are certainly a factor, the slew of remarkably strong economic data today is also forcing the rally," said John Kilduff, partner at Again Capital LLC in New York.
U.S. heating oil prices got a boost from frigid weather on the East Coast, which has drawn a number of tankers carrying diesel and heating oil from Europe, reversing a traditional trade route.
Germany's unemployment rate hit a record low in December, underpinning a broad-based economic upswing. U.S. factory activity increased more than expected in December, a further sign of strong economic momentum.
Manufacturing and construction reports also fuelled expectations for a robust U.S. economy in 2018. The Dow Jones Industrial Average hit a record high.
Ole Hansen, head of commodity strategy at Denmark's Saxo Bank, warned that "multiple but temporary supply disruptions" like the North Sea Forties and Libyan pipeline outages (and) protests across Iran ... helped create a record speculative long bet."
With pipeline outages resolved and protests in Iran showing no signs of affecting its oil production yet, Hansen said prices could fall in early 2018, especially with rising U.S. output.
"It is only a matter of time before the 10 million barrel per day (bpd) (U.S.) production target will be reached," Hansen said.
Supplies were healthy. U.S. oil production has risen by almost 16 percent since the middle of 2016, hitting 9.75 million bpd at the end of last year.
(Additional reporting by Henning Gloystein and Oleg Vukmanovic; Editing by Adrian Croft and Lisa Shumaker)