NEW YORK (Reuters) - Oil prices rose on Tuesday after OPEC forecast higher demand in 2018 and said its output fell in August, signs that its production-cutting deal with non-member countries could help reduce the global crude glut.
In its monthly report, the Organization of the Petroleum Exporting Countries also said the two hurricanes that hit the United States in recent weeks would have a “negligible” impact on demand.
The market was assessing Hurricane Irma’s effect on demand, even as key refinery restarts in the wake of Hurricane Harvey boosted expectations for crude oil consumption.
Weekly U.S. inventories data will shed light on the hurricanes’ impact. Analysts forecast crude inventories last week rose while products drew down. The American Petroleum Institute (API) will report its data on Tuesday and the U.S. Department of Energy’s Energy Information Administration (EIA) reports Wednesday.
This week’s numbers might be incomplete indicators of the longer-term supply and demand outlook, said Mark Watkins, regional investment manager at U.S. 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. He added that OPEC figures are a better signal. “That’s why you have to look out further.”
Brent crude rose 43 cents or 0.8 percent to $54.27 per barrel by 1:14 p.m. (1556 GMT). During the session it traded as low as $53.42.
U.S. West Texas Intermediate (WTI) was up 21 cents or 0.2 percent to $48.40 a barrel. It hit a session low of $47.73.
Output by OPEC’s 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd.
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 an increased premium of Brent crude for immediate delivery over that for later supplies raised hopes that the market was rebalancing.
The U.S. Energy Information Administration said it expects U.S. crude oil production in 2018 to rise by more than previously expected.
The agency forecast that 2018 crude oil output will rise 590,000 barrels per day to 9.84 million bpd. Last month, it expected a 560,000 bpd year-over-year increase to 9.91 million bpd.
Additional reporting by Libby George and Fanny Potkin in London, and Jane Chung in Seoul; Editing by Marguerita Choy and Greg Mahlich