Oil prices rose on Thursday, building on recent gains after forecasts for stronger oil demand by the International Energy Agency (IEA).
Brent crude was up 40 cents at $55.56 a barrel by 1100 GMT, having risen by 89 cents, or 1.6 percent, on Wednesday. U.S. light crude was up 40 cents at $49.70 after a 2.2 percent gain in the previous session.
Brent has now climbed by more than $10 a barrel over the past three months and is close to where it was at the beginning of the year, trading between about $55 and $57.
“By breaking $55 a barrel, Brent is moving back to the price range of January/February,” said Olivier Jakob, analyst at energy markets consultancy Petromatrix in Zug, Switzerland.
Wednesday’s gains followed an IEA report that raised its estimate of 2017 world oil demand growth to 1.6 million barrels per day (bpd) from 1.5 million bpd.
The IEA said that a global oil surplus was shrinking thanks to strong European and U.S. demand as well as production declines in OPEC and non-OPEC countries.
“Stronger demand and supply restrictions from OPEC and Russia are the main reasons for the oil price upsurge,” said Forex.com analyst Fawad Razaqzada.
Barclays Research said in a research note that the supply side of the equation was beginning to look promising,
“Unrest in Iraq and Venezuela should keep output there in check, regional crude oil contangos have dissipated and stocks are gradually declining,” it said.
Barclays added that a softer market balance is expected next year, which should ensure that the OPEC-led production deal remains in place beyond March.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, have agreed to reduce crude output by about 1.8 million bpd until next March in an attempt to support prices.
This week’s gains came despite data showing a big build in U.S. crude inventories after Hurricane Harvey.
Data from the Energy Information Administration shows a build in U.S. crude inventories last week of 5.9 million barrels, exceeding expectations.
U.S. gasoline stocks slumped by 8.4 million barrels, the largest weekly decline since the data was first recorded in 1990. U.S. gasoline futures RBc1 extended declines on Thursday, with demand expected to slip because of the impact of Hurricane Irma on Florida and Georgia.
U.S. distillate stocks fell by 3.2 million barrels.