Oil prices rise on expectations of market balance

Oil prices rise on expectations of market balance

Oil prices rise on expectations of market balance

U.S. crude oil inventories jumped last week as refineries continued to operate at depressed rates following hurricanes Harvey and Irma.

Crude oil prices were higher early Wednesday after the IEA said the level of oil and petroleum products on the market could dip below the five-year average. October crude rose 54 cents, or 1.1%, to $48.78 a barrel on the New York Mercantile Exchange.

Global output was down by 720,000 barrels a day last month from July, to 97.7 million barrels a day, the International Energy Agency said Wednesday.

"Depending on the pace of recovery for the US refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level", the IEA's report read.

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"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly", the IEA, which coordinates energy policies in industrialised nations, said in its monthly report.

The latest Energy Information Administration (EIA) data recorded an inventory build of 5.9 million barrels for the week ending September 8th following a build of 4.6 million barrels the previous week.

"Demand growth continues to be stronger than expected, particularly in Europe and the USA", the IEA said, raising its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd. Gasoline stockpiles were down 8.4 million barrels for the week, while distillate stockpiles fell 3.2 million barrels, according to the EIA. Refinery utilization rates fell by 2 percentage points to 77.7 percent, the lowest rate since 2008.

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