Picture: ISTOCK
Picture: ISTOCK

New York — Oil prices rose almost 1% on Tuesday after theOrganization of the Petroleum Exporting Countries (Opec) said its output fell in August and forecast higher demand in 2018, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.

In its monthly report Opec also said the two hurricanes that have hit the US in recent weeks would have a "negligible" impact on demand.

The market is assessing Hurricane Irma’s effect on demand, even as refinery restarts in the wake of Hurricane Harvey boosted crude oil consumption expectations.

Weekly US inventories data will be able to shed some light on the hurricanes’ impact. Analysts forecast that crude inventories last week rose while products drew down, ahead of The American Petroleum Institute (API) data on Tuesday and the US Department of Energy’s Energy Information Administration (EIA) reporton Wednesday.

The numbers, however, might not be indicative of the longer term supply demand picture, said Mark Watkins, regional investment manager at US Bank.

"Over the next two to three weeks, the EIA inventory numbers will be rather sloppy because you have production disrupted, refineries going offline and online," he said, noting that Opec figures are a better signal of market stabilization, "That’s why you have to look out further." Brent crude rose 53c or 0.9% to $54.37 per barrel by 3.56pm GMT. Earlier in the day it traded as low as $53.42.

US West Texas Intermediate (WTI) was up 33c or 0.7% to $48.40 a barrel. It had traded down to $47.73.

Opec oil output by its 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd, below a demand forecast.

Should Opec keep pumping at August’s rate, the market would see a small supply deficit next year, versus a 450,000-bpd surplus implied by last month’s report.

Opec said inventories were falling and that an increase premium of Brent crude for immediate delivery over that for later supplies raised hopes that a rebalancing is under way.

Reuters

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