OPEC forecast higher demand for its crude in 2018 on Thursday due to rising global consumption, and pointed to signs of a stronger oil market that suggest an OPEC-led production cut is getting rid of price-sapping excess supply.
In a monthly report, the Organization of the Petroleum Exporting Countries said the world would need 32.42 million barrels per day (bpd) of its oil next year, up 220,000 bpd from the previous forecast.
OPEC also said physical oil markets in Europe and West Africa had firmed and that an increase in the price of Brent crude oil for immediate delivery compared to later supplies indicated the glut was easing.
"The entire forward curve has flattened for Brent amid some bullish indicators in the physical market," OPEC said. "Crude differentials strengthened notably for a range of key grades in the Mediterranean, North Sea and West African markets."
Oil rose to more than $53 a barrel, shrugging off data in the report showing another jump in OPEC output and suggesting the market will remain in surplus next year.
OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers cut half as much, until March 2018.
The deal is aimed at getting rid of excess stocks and in a sign it is working, OPEC said inventories in developed economies declined in June and have fallen by 87 million barrels compared to the five-year average since the cut started in January.
"Further declines in U.S. crude stocks are likely, given the record rates at which U.S. refineries are running," OPEC said.
U.S. refinery use has hit a 12-year high, official figures showed on Wednesday.
Demand, Output Up