Oil headed for a second weekly advance on forecasts for accelerating crude demand and as U.S. Gulf Coast refineries continued to recover from Hurricane Harvey.
Futures were little changed in New York, up 5.4 percent this week, after trading above $50 a barrel on Thursday for the first time in five weeks. OPEC and the International Energy Agency boosted demand forecasts, signaling the surplus that has weighed on prices may shrink further. U.S. refiners are resuming operations after Harvey halted almost a quarter of the nation’s capacity.
While oil has rebounded the past two weeks, prices have struggled to hold above $50 a barrel this year as rising U.S. output stifles supply curbs led by members of the Organization of Petroleum Exporting Countries. The group and its allies are said to be discussing extending those cuts past the end of March by more than three months as the global glut drains slower than expected.
“The feel-good factor appears to have returned to the oil market,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Underpinning the prevailing sentiment is the positive afterglow of this week’s frenzy of bullish oil demand forecasts from the leading energy agencies. These upgraded projections have, coupled with the recent decline in OPEC output, shored up re-balancing expectations.”
West Texas Intermediate for October delivery was at $50.04 a barrel on the New York Mercantile Exchange, 15 cents higher, at 1:05 p.m. in London. Total volume traded was about in line with the 100-day average. Prices rose 59 cents, or 1.2 percent, to close at $49.89 on Thursday, the highest since July 31. The contract climbed as high as $50.50 during intraday trade Thursday.
Brent for November settlement added 22 cents to $55.69 a barrel on the London-based ICE Futures Europe exchange. The contract added 31 cents to $55.47 on Thursday. Prices are up 3.6 percent this week. The global benchmark crude traded at a premium of $5.18 to November WTI.
Global demand will climb this year by the most since 2015, the Paris-based IEA said Wednesday. OPEC on Tuesday raised estimates for the amount of crude it will need to supply in 2018 on stronger consumption from Europe and China.
Oil-market news:
The spread between Brent and WTI will narrow in coming weeks as U.S. refining capacity recovers from the disruption by Hurricane Harvey, according to Fitch’s BMI Research. Mexico’s drivers may pay more for fuel after a power failure hit a second refinery the same week that the strongest earthquake in more than a century shut the nation’s biggest plant.
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