Oil Gains on Falling Stocks, Higher Demand Forecast

Oil Gains on Falling Stocks, Higher Demand Forecast

West Texas Intermediate, a measure of U.S. oil prices, hit $50 a barrel for the first time in 5 weeks on Thursday. Crude stockpiles rose by 5.9 million barrels during the same week, a result of lagging demand from recovering refineries in the wake of Harvey.

Meanwhile, the International Energy Agency said in its latest monthly report that the global market is starting to tighten due to robust demand and a drop in output from both the OPEC and other producers.

Oil prices rose on Tuesday after OPEC forecast higher demand in 2018 and Russian Federation and Venezuela confirmed their commitment to a production - cutting deal to reduce the global crude glut.

USA crude rose 59 cents to settle at $49.89 a barrel and benchmark Brent settled up 31 cents at $55.47.

OPEC on Tuesday forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut that has weighed on prices.

"We're all trying to make our way in this world of between US$50 and US$60 and I would expect that to continue". Growth is forecast to average 700,000 b/d in 2017 and almost 1.5 mb/d in 2018 as higher production from Canada and the North Sea offsets weaker United States and Brazilian estimates.

Traders said widening of positions by participants on the back of strong demand in spot market against restricted supplies from growing regions, mainly kept crude palm oil prices higher at futures trade.

However, U.S. data showed a big increase in crude inventories due to the ongoing effects of hurricane.

This week's gains have come despite data showing a big build in US crude inventories after Hurricane Harvey.

EIA said that as supplies were disrupted, the East Coast drew down inventories of motor gasoline, falling by 2.2 million barrels, or 3.5 percent, compared to the previous week.

The IEA said global demand would climb this year by the most in two years while OPEC talked about higher consumption in Europe and China.

Also helping prices, demand for oil increased in the second quarter, largely driven by Germany and the USA, according to the International Energy Agency.

If these weren't enough, the U.S. Energy Information Administration lowered its oil production forecast for this year and the next by 1% and 0.7%, respectively.