Oil price rises to above US$50 a barrel

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The International Energy Agency recently announced that they are raising the bar and its estimates for the 2017 world oil demand which grew to 1.6 million barrels per day from the previous 1.5 million barrels per day.

On Wednesday, the IEA published the most bullish oil report this year, saying that demand growth in Q2 was very strong and would continue to be robust.

The American Petroleum Institute had reported late Tuesday (http://www.marketwatch.com/story/api-data-show-rise-in-us-crude-supply-drop-in-gasoline-stockpiles-sources-2017-09-12) an increase of 6.2 million barrels.

On the other hand, Hurricane Harvey and Irma have caused around 900,000 barrels per day drop in oil demand.

Opec and other producers, including Russian Federation, have agreed to reduce output by about 1.8 million barrels per day (b/d) until March 2018 in a bid to reduce global oil inventories and support oil prices.

The IEA said OPEC crude production fell in August for the first time in five months, thanks to both cuts in production as well as a flare-up in turmoil in Libya disrupting output.

There was also further speculation that OPEC production cuts could be extended for at least 3 months beyond the end of March 2018.

Crude oil fell in Asia on Friday after tested an intermediate range ballistic missile over the Japanese island of Hokkaido and into the Pacific Ocean in the latest tit-for-tat with the USA and its allies for pushing United Nations economic sanctions, with investors looking ahead to the latest weekly US data. He also referencing dropping ship reserves and abridged output by OECD economies, where production has fallen to five-year averages.

It also forecast oil demand in the Middle East to rise over 2016 levels, as economic momentum gains pace.

The US dollar index was down 0.4 per cent against a basket of currencies, making oil cheaper for holders of other currencies.

ExxonMobil Corp said it was restarting its 362,300-barrels-per-day Beaumont, Texas, refinery for the first time since it was shut by Harvey.

Some investors are "not convinced that the market balance is changed enough to support a price above US$50 as of yet". Talks will be held with other OPEC members about extending the cuts at an October 4 meeting of the Gas Exporting Countries Forum in Moscow.

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