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Oil Rises as IEA Sees Higher Demand, Shrinking Stockpiles
Oil Rises as IEA Sees Higher Demand, Shrinking Stockpiles

Oil Rises as IEA Sees Higher Demand, Shrinking Stockpiles

Oil Rises as IEA Sees Higher Demand, Shrinking Stockpiles

Oil prices rose on Wednesday after the International Energy Agency said the global oil surplus was starting to shrink due to robust global demand and an output drop from OPEC and other producers.
International benchmark Brent crude was up 27 cents, or 0.5%, at $54.54 a barrel. US West Texas Intermediate was up 38 cents, or 0.8%, at $48.61 a barrel, CNBC reported.
“Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the IEA, which coordinates energy policies in industrialized nations, said in its monthly report.
“Demand growth continues to be stronger than expected, particularly in Europe and the US,” the IEA said, raising its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd. The assessment echoed a publication by the Organization of Petroleum Exporting Countries, which on Tuesday forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market.
But Wednesday’s price gains were capped by reports of rising US crude inventories. Analysts say US stocks data may not give a full picture in the coming weeks because of two major hurricanes—Harvey and Irma.
Crude inventories rose by 6.2 million barrels in the week to Sept. 8 to 468.8 million, nearly double analysts’ expectations for an increase of 3.2 million barrels. The EIA also said on Tuesday it had revised both its 2017 and 2018 oil production forecast figures lower to reflect, in part, the effects of Hurricane Harvey.
According to EIA, the global oil surplus is beginning to shrink due to stronger-than-expected European and US demand growth, as well as production declines in OPEC and non-OPEC countries.  The agency, which coordinates energy policies of industrial nations, raised its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd.
“OECD demand growth continues to be stronger than expected, particularly in Europe and the US,” the Paris-based IEA said.
“Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the IEA said.
Robust demand in industrialized countries was a key factor behind global demand growing 2.3 million bpd in the second quarter, the highest quarterly year-on-year rise since mid-2015.

 

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