Brent oil prices held steady near five-month highs, and were on track for the highest weekly rise since the end of July on higher demand forecasts and the restart of oil-hungry refineries in the United States. The Organization of the Petroleum Exporting Countries this week forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its deal with non-OPEC states to cut output is helping tackle a glut.
That was followed by a report by the International Energy Agency (IEA) saying the glut was shrinking thanks to strong European and U.S. demand, as well as production declines in OPEC and non-OPEC countries.
“Prices have now advanced for the last two weeks off increased demand forecasts from both OPEC and the IEA combined with the near-term demand uplift expected as U.S. oil refineries seek to restart operations post Hurricane Harvey,” analysts at Panmure Gordon said.
Benchmark Brent crude was up 7 cents at $55.54 a barrel at 1117 GMT in a volatile session that stretched from an intra-day low of $54.86 to a high of $55.74 a barrel. The contract was on track for its third straight weekly gain and the highest weekly rise since the end of July.
U.S. West Texas Intermediate crude was up 8 cents at $49.97 a barrel. The contract was set for a more than 5 per cent weekly gain, also its strongest in nearly two months.
Oil investors eyed further impact from increasing crude demand from U.S. oil refineries restarting after hurricane outages.
On Wednesday, 13 of 20 affected U.S. refineries were at or near normal operating rates and another five were restarting or ramping up, according to IHS Markit.
Analysts at HSBC said that despite the U.S. refinery outages, 2017 was set to be an “extremely strong year” for oil demand growth, a key factor underpinning a rise in prices.
“We remain convinced of longer-term upside to crude prices. With the lack of new major project sanctions, we expect conventional non-OPEC supply to start declining post-2018,” they said.
They maintained their 2018 and 2019 Brent price assumptions at $65 and $70 a barrel, respectively.