Oil Gains on Falling Stocks, Higher Demand Forecast

Oil prices rise for 3rd straight session as IEA reports drop in global supply

Oil prices rose for a third straight day on Wednesday after the International Energy Agency said global crude production fell for the first time in four months in August, helping to rebalance the oversupplied market.

The IEA revised upwards its estimate for demand growth in 2017 by 100,000 barrels a day (bpd) to 1.6 million bpd, or 1.7%.

According to secondary sources, total OPEC production averaged 32.76 million barrels per day in August, a decrease of 79,000 over the previous month. That was larger than the S&P Global Platts survey expectations for a 4 million-barrel fall.

Markets will be influenced later in the day when the U.S. Energy Information Administration releases its short-term market report, which includes forecasts for crude oil prices.

"Demand growth is strengthening: robust demand in OECD (the Organisation for Economic Co-operation and Development) countries was a key factor in 2Q17's global growth of 2.3 mb/d, the highest quarterly year-on-year increase since mid-2015".

Global crude oil prices improved, as OPEC and non-OPEC countries continued to conform to voluntary output adjustments and United States stocks declined further, OPEC said.

BP Chief Executive Bob Dudley said oil prices were likely to stay up to 60 dollars as major producers kept output restricted.

OPEC supply fell by 210,000 barrels, marking the first decline in five months.

On Tuesday, OPEC, in its monthly report, also pointed to a decline in its production in August as a sign that supply and demand could be moving further toward balance. Diesel futures rose 0.9 cent, or 0.51%, to $1.7775 a gallon.

Oil is higher for the fourth day in a row as the USA refinery industry restarts after Harvey.

November Brent, the global benchmark, climbed 89 cents, or 1.6%, to end at $55.16 a barrel, which was the highest finish since mid-April.

For WTI crude to sustain a US$50-plus price tag, traders will require "increasing clarity on Opec's strategy on eventually bringing back barrels onto the market and the possibility of an extension beyond March", said Eric Nuttall, senior portfolio manager with SPR & Co in Toronto. OPEC's own production is being watched closely as countries exempt from the cut - Libya and Nigeria - have boosted output more than expected this year.

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