Oil Rises on Signs of Tightening Supply

US Hurricanes Affecting Oil Prices, Saudi Could Cut Output

Analysts said the report also indicated OPEC's production-cutting deal with non-OPEC is helping to curb a supply glut.

"Oil inventories are coming down onshore and oil held in floating storage has been declining since June", he said.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 1.7%, at $22.27 in a 52-week range of $21.70 to $36.35. As I have written before, the IEA is notorious for underestimating demand and had to once again raise their forecast.

According to a report released by the agency yesterday, strong demand in the second-quarter has helped the oil markets which have been struggling to rebalance, as oversupply had dragged the prices downwards.

At 10:45am CST, WTI was up 1.51 percent at * a href="http://oilprice.com/commodity-price-charts?1&page=chart&sym=CL*1" *US$48.96, while Brent was trading up 1.07 percent at US$54.85. The different scenarios depend on multiple variables, including the level of compliance with agreed cuts by OPEC and its allies, the pace of the oil output recovery in Libya and Nigeria, the strength of global demand, and the pace of the recovery in USA shale output.

The fall in production was the first in four months and follows hot on the heels of OPEC's recent decision to slow production. After the markets closed on Tuesday, the American Petroleum Institute reported that United States oil inventories rose by almost 6.2 million barrels in the week ended September 8.

The global surplus of crude and stocks over the five-year average fell to 190 million barrels. At the same time, "there has been a fair bit of OPEC rhetoric in the market the last few days of potentially extending cuts and focusing on reducing exports, which would all be positive".

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.

Gasoline stocks fell by 8.4 million barrels, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop.

On the whole, prices may remain in a range in the short term but the monthly reports from the OPEC and IEA will be awaited for data on market balances and the level of global inventories. Nigeria is expecting pressure from other OPEC members at the cartel's regular meeting in November this year, He also expressed his skepticism of initial OPEC oil price target of $60 per barrel in the wake of the deal.

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