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Oil mixed, but erratic, on USA weather impacts and demand scenario

Oil mixed, but erratic, on USA weather impacts and demand scenario

Traders said widening of positions by participants on the back of strong demand in spot market against restricted supplies from growing regions, mainly kept crude palm oil prices higher at futures trade.

Markets will be influenced later in the day when the U.S. Energy Information Administration releases its short-term market report, which includes forecasts for crude oil prices.

OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium over that for later supplies, known as backwardation, raised hopes that a long-awaited market rebalancing was under way.

"OECD product stocks were only 35 million barrels above the five-year average at end-July", the IEA said.

The No. 3 OPEC producer pumped 3.82 million barrels per day in August, down 2,300 bpd compared to the previous month, OPEC said in its latest monthly report, citing secondary sources.

Traders also weighed weekly data from the USA government which revealed a smaller-than-expected rise in crude supplies, a hefty drop in gasoline stockpiles and a jump in domestic output as production in the Gulf of Mexico recovered in the wake of disruptions from Hurricane Harvey.

But in August, for the first time in four months, OPEC finally managed to follow through on its promises when its production fell from the previous month's totals. The IEA sees global oil demand rising this year by the most since 2015, while OPEC boosted projections for consumption in Europe and China.

Irma's hit in demand will partly offset the Gulf Coast's interrupted refinery runs, which are taking longer than expected to recover, according to the bank.

Oil prices rose after the report was published, with Brent crude adding 10 cents to $54.37 per barrel around 0820 GMT.

USA crude production rebounded to an average of 9.4 million barrels per day last week from 8.8 million bpd a week earlier, entirely the result of increases in the lower 48 states.

"Outright benchmark crude prices gained in August, reflecting higher demand in the northern hemisphere and tight physical markets for oil products", the IEA said.

Oil is higher for the fourth day in a row as the USA refinery industry restarts after Harvey.

The report also stated that refineries reduced output following Hurricane Harvey, while gasoline and distillate inventories declined. The IEA said it is time to reexamine the region's energy security with the U.S. adding refined products to the country's strategic petroleum reserves alongside crude.

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