Brent crude prices have jumped over 1% hitting a high of $55.74 a barrel after a report by the International Energy Agency (IEA) that predicted stronger demand for oil, Financial Times reports.
IEA yesterday lifted its global oil demand growth estimate to 1.6 m barrels per day from a previous estimate of 1.5m and said global oil inventories were shrinking.
"A number of fundamental factors are helping to support oil prices at the moment. In short, stronger demand and ongoing supply restrictions from the OPEC and Russia are the main reasons for the oil price upsurge," said Fawad Razaqzada, analyst at Forex.com.
Global benchmark Brent crude prices were down 0.11 per cent at $55.10 per barrel, while West Texas Intermediate crude was 0.08 per cent up at $49.34 per barrel.
"The news was taken as confirmation of the prevalent supply tightening narrative, i.e. that the oil surplus is slowly disappearing," said Norbert Rucker, head of macro and commodity research at Julius Baer.
"However, we believe that the news is largely backward-looking and mainly confirms what the timely and accurate official US statistics had been revealing throughout the summer: strong fuel demand and declining crude oil storage. Instead, the focus should be on the near-term outlook. The oil market enters a soft patch as the summer driving season wraps up and hurricanes Harvey and Irma more negatively impact demand than supply," he explained.