OPEC oil output by its 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd, below a demand forecast.
Crude oil prices inched up after the EIA reported a smaller-than-expected build of 5.9 million barrels in crude oil inventories for the week to September 8, after a 4.6-million-barrel build in the prior week due to the Gulf Coast refinery shutdowns.
The largest refinery in the United States, in Port Arthur Texas, was running at reduced rates, sources told Reuters. Still, the IEA's report shows producers are having some success in their goal of reducing bloated oil inventories back to typical levels.
Oil prices rose nearly 1 percent on Tuesday after OPEC said its output fell in August and forecast higher demand in 2018, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.
But the oversupply of USA crude persists, causing a recent widening in the WTI/Brent spread, said James Williams, president of energy consultant WTRG Economics.
Harvey struck the USA oil hub of Texas two weeks ago, knocking out a quarter of the nation's refineries. Benchmark Brent crude has lost 6 per cent this year and was trading at $53.81 a barrel at 11.10am UAE time on Tuesday.
"By the end of this month, we expect crude stocks to be 43 million barrels higher than they would have been had Harvey and Irma not occurred", analysts at Goldman Sachs said in a note. While these margins will likely continue to fall in the week ahead, runs will increase on the Gulf Coast as the affected facilities are slowly brought back, a positive for domestic US crude prices.
The price of crude oil has stabilised at $54.25 as the Organisation of Petroleum Exporting Countries, OPEC, predicted increased stability of the market, yesterday.
From around $48.75 p/b ahead of the data, prices edged higher although the overall reaction was limited given a very mixed report and there was no net change in prices. An extension of at least three more months is being discussed before the cartel meets again in November.