Oil prices rise as IEA sees higher demand, shrinking inventories

Oil prices rise as IEA sees higher demand, shrinking inventories

"Impact of the 2017 Atlantic Hurricane season continues to be seen in today's report with a build observed in the commercial crude stockpile and drawdowns in refined products", said Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London.

Oil prices settled higher on Monday amid an uptick in sentiment after Saudi Arabia said its oil minister held talks with counterparts over the possibility of extending the supply-cut agreement beyond March 2018. October crude rose 54 cents, or 1.1%, to $48.78 a barrel on the New York Mercantile Exchange. Hurricane Irma, meanwhile, has shifted market dynamics because of the strain on demand.

Global output was down by 720,000 barrels a day last month from July, to 97.7 million barrels a day, the International Energy Agency said Wednesday. "The focus now shifts to the post-Harvey scenario", he said.

"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly".

That mirrors the sentiment expressed from the National Bank of Kuwait this week, which said some of the rally could be explained by the increase in geopolitical tensions, notably regarding North Korea, and concerns about whether or not U.S. President Donald Trump's administration could enact any of the reforms and initiatives he pledged on the campaign trail.

Oil prices hung onto earlier gains as government data showed US crude stocks rose sharply last week.

USA crude stocks rose sharply last week as refinery output declined further in the wake of Hurricane Harvey, causing gasoline stocks and distillate inventories to drop as well, the Energy Information Administration said on Wednesday.

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