Oil prices recouped some losses on Tuesday, helped by OPEC saying its output fell in August, indicating a production-cutting deal with non-member countries is helping to tackle a supply gut.
In its monthly report, the Organization of the Petroleum Exporting Countries also raised its demand forecast for 2018, and said two hurricanes that hit the United States in recent weeks would have “negligible” impacts on demand.
The market is grappling with Hurricane Irma’s effect on demand, even as refinery restarts in the wake of Hurricane Harvey boosted crude oil consumption expectations.
International benchmark Brent crude edged 32 cents higher to $54.16 per barrel by 1235 GMT from the previous close. Earlier in the day, it traded as low as $53.42.
U.S. West Texas Intermediate (WTI) crude was 17 cents higher at $48.24 a barrel. It had traded down to $47.73.
The 14-country producer group said its oil output in August fell by 79,000 barrels per day (bpd) from July to 32.76 million bpd, below a demand forecast.
OPEC Secretary General Mohammad Barkindo said on Monday a deal to cut supply would help the market rebalance and strong demand could further reduce oil inventories.
OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium to that for later supplies raised hopes that a rebalancing is under way.
“This is due to the shooting up of demand for prompt-loading barrels and amid increasing sentiment that the oil market will rebalance over the next year with a major drawdown in crude and product stocks,” OPEC said in the report.
The market is also watching closely for U.S. inventories data in the wake of recent storms. The American Petroleum Institute (API) will release its stocks data on Tuesday while the U.S. Department of Energy’s Energy Information Administration (EIA) will release its figures on Wednesday.
“A lot of what’s going to drive oil markets is anticipating the U.S. (stocks). As showed by the Reuters poll, the range of expectations is quite wide…a lot of volatility past the release is possible,” said Harry Tchilinguirian, global head of commodity markets strategy with BNP Paribas.
Irma slammed into Florida on Sunday, leaving more than 7.4 million homes and businesses without power. The storm hit just over two weeks after Hurricane Harvey hobbled the U.S. Gulf Coast refining sector, knocking nearly a quarter of its capacity offline.
The largest U.S. refinery, Motiva Port Arthur, and a number of others were restarting this week, but Goldman Sachs had warned that demand could fall considerably due to the storms.