Oil tallied a third straight gain Wednesday, with USA prices settling at a five-week high and Brent at its highest since April, buoyed by a report from the International Energy Agency that showed global crude production fell for the first time in four months in August.
"This first stirring of backwardation since oil prices were above $100 a barrel is seen as a sign of tightening supplies and strong demand".
Gasoline stockpiles were down 8.4 million barrels for the week, the EIA said.
This is the second consecutive month in which the agency has lifted its demand growth forecast after it revised up the growth estimate to 1.5mn bpd in August.
The historic output cut deal wherein OPEC, which accounts for one-third of the global output, Russian Federation and other producers agreed to curb production by 1.8 million barrels per day until next March, is now paying off.
Referencing to the oil production cut agreed by OPEC members, he said all nations need to work together to avoid a supply crunch adding that energy and environmental issues "are of common concern and, as such, can not be pursued in isolation".
As Hurricane Harvey swirled over the Gulf Coast, making landfall in Texas on August 25, refineries including those operated by Exxon Mobil Corp., Valero Energy Corp. and Marathon Petroleum Corp. swiftly worked to shut plants down. IEA's oil and market division head Mr. Neil Atkinson told CNBC that "pretty robust" demand showed that a rebalancing of the market is "underway".
The difference between the two benchmarks recently had widened to around $6 a barrel after Hurricane Harvey took several refiners in the US offline, but analysts said that USA crude is poised to close some of the gap as refiners ramp back up and exports from Gulf Coast ports resume. The cartel expects global consumption to rise by 1.42 million barrels per day this year and 1.35 million barrels per day next year, up 50,000 barrels per day and 70,000 barrels per day, respectively, from the previous projection.
The distillate stocks of the country also fell by 3.2 million barrels. Gold is 0.1 per cent lower at 1,320.40/troy ounce.
Oil is higher for the fourth day in a row as the USA refinery industry restarts after Harvey.
Some investors are "not convinced that the market balance is changed enough to support a price above US$50 as of yet".
This week, Opec and its allies were said to be discussing extending supply cuts past the end of March, and compliance with the supply limits rose to 96 per cent in August, Opec data from so-called secondary sources showed.