Oil prices were bolstered today following figures that showed the global oil surplus declined as European and US demand rose more than expected in the second quarter.
The International Energy Agency (IEA) raised its 2017 global oil demand growth estimate to 1.6m barrels per day (bpd) from 1.5m bpd as global oil demand grew by 2.3m bpd, or 2.4 per cent, year-on-year in the second quarter.
"OECD [Organisation for Economic Co-operation and Development] demand growth continues to be stronger than expected, particularly in Europe and the US," the IEA said, adding that hurricanes Harvey and Irma are projected to slow US oil demand growth in the third quarter.
"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise – albeit very modestly."
Brent crude, the global benchmark, futures traded 0.7 per cent higher at $54.65 per barrel at the time of writing. US benchmark West Texas Intermediate (WTI) traded 0.85 per cent up at $48.64 per barrel.
Global oil supply fell for the first time in four months by 720,000 bpd in August due to unplanned outages and scheduled maintenance, mainly in countries not in the Organisation of the Petroleum Exporting Countries (Opec).
OECD commercial stocks were unchanged in July at 3.016bn barrels at a time when they normally increase.
The global surplus of crude oil stocks over the five-year average fell to 190m barrels.
"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 Paris-based IEA said.
This follows Opec's monthly report yesterday which said the cartel's production dropped in August for the first time since March. Opec output fell by 79,100 bpd to 32.76m in August.
Opec and non-Opec members including Russia have agreed to cut production by 1.8m bpd until March 2018 to reduce the global oversupply and prop up crude prices, and the cartel is said to be mulling an extension to the deal.