Oil prices steadied on Thursday, holding on to recent gains after forecasts for stronger oil demand by the International Energy Agency (IEA).
Benchmark Brent crude was up 20 cents at $55.36 a barrel by 0930 GMT, after rising 89 cents or 1.6 percent on Wednesday. US light crude was up 25 cents at $49.55 after gaining 2.2 percent in the previous session.
Brent has now climbed more than $10 a barrel over the last three months and is close to where it was at the beginning of the year, trading between about $55 and $57 a barrel.
“By breaking $55.00 a barrel, Brent is moving back to the price range of January/February,” said Olivier Jakob, analyst at energy markets consultancy Petromatrix in Zug, Switzerland.
Wednesday’s gains followed an IEA report which raised its estimate of 2017 world oil demand growth to 1.6 million barrels per day (bpd) from 1.5 million bpd.
The IEA said a global oil surplus was beginning to shrink due to stronger-than-expected European and US demand, as well as production declines in OPEC and non-OPEC countries.
The supply side of the equation also looks promising, Barclays Research said.
“Unrest in Iraq and Venezuela should keep output there in check, regional crude oil contangos have dissipated, and stocks are gradually declining,” it said.
Softer market balance
That said, “a softer market balance is in store for next year, which should ensure an OPEC/non-OPEC deal remains in place beyond March 2018”, Barclays added.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, have agreed to reduce crude output by about 1.8 million bpd until next March in an attempt to support prices.
This week’s gains came despite data showing a big build in US crude inventories after Hurricane Harvey.
Energy Information Administration figures showed a build in US crude inventories last week of 5.9 million barrels, exceeding expectations.
US gasoline stocks slumped 8.4 million barrels, the largest weekly decline since the data began in 1990. US gasoline futures extended declines on Thursday as demand was expected to slip due to the effects of Hurricane Irma on Florida and Georgia.
Distillate stocks fell by 3.2 million barrels, the data showed.
Many refineries in the US Gulf are slowly returning to normal as they recover from floods and storm damage.
ExxonMobil Corp said it was restarting its 362,300-barrels-per-day Beaumont, Texas, refinery for the first time since it was shut by Harvey.