Oil prices decline as United States crude stocks soar

"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly", the IEA said.

Phil Flynn, senior market analyst at Price Futures Group, said the weekly drop was the largest in history and that the storms were to blame.

Much of that was because of a near 10 million-barrel increase in stocks in the US Gulf region and as crude production rebounded from a brief Harvey interruption.

Oil consumption will increase in 2017 by an upwardly revised 1.6m barrels a day to 97.7m b/d, the energy body said its closely-watched monthly oil market report published on Wednesday. EIA inventory data, meanwhile, is likely to show a huge build in crude oil stockpiles as USA refinery outages from Hurricane Harvey leave oil locked in storage. But data show that in the first eight months of the year Iran's production averaged 3.79 million barrels daily. This compared to expectations that inventories would rise by 3-million barrels.

On one hand, IEA sees stronger oil demand growth in two years.

"We expect crude prices to be stuck in somewhat of a holding pattern until we have Gulf Coast refineries brought back to full capacity".

Notably, U.S. crude is trading below $50.00 per barrel while Brent oil is hovering around $55.00 per barrel.

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The EIA also revealed that USA commercial crude oil inventories increased by 5.9 million barrels from the previous week.

"This is due to the shooting up of demand for prompt-loading barrels and amid increasing sentiment that the oil market will rebalance over the next year with a major drawdown in crude and product stocks", OPEC said in the report.

As well, weekly data from the U.S. government's Energy Information Administration (EIA) revealed a smaller-than-expected rise in crude supplies, a hefty drop in gasoline (petrol) stockpiles and a jump in domestic output as production in the Gulf of Mexico and along the Texas coast around Houston recovered in the wake of Hurricane Harvey.

For months, the oil cartel OPEC has anxious about what it should be doing as its plan to restrict its collective crude production (and hopefully kick off a price rebound) was failing.

It recommended that the United States strengthens its energy security to address events, such as hurricanes, by potentially adding products to government-held inventories. The IEA and OPEC also boosted demand forecasts.

Oil is higher for the fourth day in a row as the USA refinery industry restarts after Harvey.


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