Investing.com – Oil prices settled higher racking up their biggest weekly gain since July on Friday amid rising expectations that higher oil demand will reduce excess crude supplies to Opec’s five-year average target.
On the New York Mercantile Exchange crude futures for October delivery rose $0.00 to settle at $49.89 a barrel, while on London's Intercontinental Exchange, Brent gained 0.23% to trade at $55.60 a barrel.
Opec said production in August fell by 79,000 barrels a day (bpd) to 32.76 million as falling production from Venezuela, Iraq, the UAE and Saudi Arabia offset rising output from Nigeria.
“It is clear the rebalancing process is under way,” Opec’s secretary-general Mohammad Barkindo said, expressing optimism that growing demand in the second of the half of year would continue to dent excess supplies.
That was followed by the International Energy Agency report forecasting a surge in demand growth in 2017 by 100,000 barrels a day (bpd) to 1.6m bpd, or 1.7%. The bullish outlook on oil demand, lifted expectations that the demand and the supply imbalance in oil markets would continue to narrow in the coming months.
The duo of reports overshadowed data showing U.S. crude inventories rose more than expected last week, as the fallout from Hurricane Harvey, which tore through the U.S. oil heartland of Texas in August, forcing refineries to shutdown weighed on crude demand.
The post-Harvey refinery recovery is underway, however, as data earlier in the week from IHS Markit indicated that 13 of 20 affected U.S. refineries were restarting operations.
Crude output is expected to remain subdued as U.S. oil rigs continued to decline, pointing to a slowdown in production which could bolster crude prices.
Oilfield services firm Baker Hughes said its weekly count of oil rigs operating in the United States declined by 7 to 749.
The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.
“On the U.S. side, steadily declining rig counts of late have raised the possibility of stalled U.S. production gains, with current output still holding below pre-Harvey levels,” said Robbie Fraser, commodity analyst at Schneider Electric (PA:SCHN), in a note.