Oil prices rose after the International Energy Agency (IEA) said in its monthly oil market report for September that global oil demand grew “very strongly” year-on-year in the second quarter this year, which prompted the IEA to revise up its growth estimate to 1.6mn bpd for this year

This is the second consecutive month in which the agency has lifted its demand growth forecast after it revised up the growth estimate to 1.5mn bpd in August.

Although Hurricanes Harvey and Irma are expected to slow US oil demand growth in the third quarter of this this year, “OECD demand growth continues to be stronger than expected, particularly in Europe and the USA,” the IEA said.

On the other hand, also supporting the oil prices, was the fact that OPEC production dropped in August for the first time in five months, following production disruptions in Libya and other OPEC members producing less crude. OPEC’s members bound by the pact to cut production achieved an 82 per cent compliance rate in August, higher than the 75 percent in July. Year to date, compliance within OPEC stands at 86 percent, according to the IEA.

The OECD commercial stocks surplus over the five-year average dropped to 190mn bbl in July, compared to more than 219mn bbl above the five-year average as of the end of June.

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

The market is tightening but OPEC’s goal to reduce inventories is happening gradually and slowly, perhaps “a little more slowly than they would have liked,” Neil Atkinson, head of oil industry and markets at IEA, told Bloomberg in comments on the agency’s report

"Though difficult to predict, if stockpiles continue to deplete and demand remains fairly steady in OECD economies, whilst emerging Asia (including China) increases energy consumption, crude prices could trade around the US$54-57/barrel range in Q4 2017, rising to US$60 in Q1 2018," commented Moin Siddiqi, economist.