Brent oil prices hovered near five month highs, and were on pace for the largest weekly increase since the end of July on stronger demand projections and the resume of oil refineries in the U.S. The OPEC this week predicted higher demand for its oil next year and directed focus to indications of a firming global market, signaling its deal with non-OPEC states to trim output is helping tackle a glut.
That came after a report by the International Energy Agency stating the surplus was trimming due to strong European and U.S. demand, as well as production drop in OPEC and non-OPEC countries.
“Prices have now advanced for the last two weeks off increased demand forecasts from both OPEC and the IEA combined with the near-term demand uplift expected as U.S. oil refineries seek to restart operations post Hurricane Harvey,” analysts at Panmure Gordon reported.
Benchmark Brent crude LCOc1 increased 7 cents at $55.54 a barrel at 1117 GMT in a volatile session that stretched from an intra-day low of $54.86 to a high of $55.74 a barrel. The contract was on pace for its third consecutive weekly increase and the highest weekly hike since the end of July.
U.S. West Texas Intermediate crude CLc1 advanced 8 cents at $49.97 a barrel. The contract was set for a more than 5 percent weekly increase, also its strongest in almost two months.
Oil investors watched for further impact from hiking crude demand from U.S. oil refineries restarting after hurricane outages.
THE MORNING REPORT
Start your workday the right way with the news that matters most.
Analysts at HSBC reported that despite the U.S. refinery outages, 2017 was set to be an “extremely strong year” for oil demand growth, a key factor supporting a increase in prices.
“We remain convinced of longer-term upside to crude prices. With the lack of new major project sanctions, we expect conventional non-OPEC supply to start declining post-2018,” they stated.
They sustained their 2018 and 2019 Brent price assumptions at $65 and $70 a barrel, individually.