Futures gained as much as 1.8% in NY. The IEA said a global oil surplus was beginning to shrink due to stronger-than-expected European and USA demand growth, as well as production declines in OPEC and non-OPEC countries. Instead, the cartel could call an extraordinary meeting for mid-March to discuss a possible extension of the deal, Reuters reported. The latest report took a special look at United States gulf coast infrastructure after the recent hurricanes that have caused flooding and disrupted facilities such as refineries in the important world energy hub.
The IEA's stronger demand estimate have helped lift oil prices, Matthew Beck, managing director of a US$8 billion (RM33.6 billion) oil and natural gas bond and private-equity portfolio at John Hancock Financial Services Inc in Boston, said by telephone. At the same time, "there has been a fair bit of OPEC rhetoric in the market the last few days of potentially extending cuts and focusing on reducing exports, which would all be positive".
November Brent, the global benchmark, climbed 89 cents, or 1.6%, to end at $55.16 a barrel, which was the highest finish since mid-April. OPEC's members bound by the pact to cut production achieved an 82 per cent compliance rate in August, higher than the 75 percent in July.
OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium over that for later supplies, known as backwardation, raised hopes that a long-awaited market rebalancing was under way. "There's more of a bullish mood out there".
US crude settled up $1.07, or 2.2 percent, to $49.30 per barrel and Brent crude was up 89 cents to $55.16 a barrel. Total volume traded was about 15 per cent above the 100-day average.
However, U.S. data showed a big increase in crude inventories due to the ongoing effects of hurricane. Analysts anticipate refineries will come back online after Harvey shut almost a quarter of the nation's refining capacity while demand slips due to the effects on the high-consuming states of Florida and Georgia following Hurricane Irma.
Nigeria and Libya, whose output has been affected by political turmoil and attacks, are exempt from the agreement. Crude inventories rose by 6.2 million barrels in the week to September 8 to 468.8 million, compared with analysts' expectations for an increase of 3.2 million barrels.