Oil price rose on Wednesday as the International Energy Agency (IEA) sees a crude deficit in the first half of 2017 and data showed U.S. crude inventories fell.
The IEA said members of the Organization of Petroleum Exporting Countries kept their promise to cut production for the second straight month. OPEC had agreed to cut production to boost oil price at the end of last year.
“Early indicators of 1Q17 (first quarter of 2017) demand support this, with slowdowns seen in January in Japan, Germany, Korea and India,” the IEA said. The agency also said oil demand growth is expected to drop to 1.4 million barrels a day in 2017 from 1.6 million barrels a day last year.
Brent futures for May delivery rose 1.45 percent to $51.66 a barrel from Tuesday’s close. U.S. West Texas Intermediate crude for April delivery was up 74 cents in the early trading. The price had hit a three-month low this week on the rising U.S. supply.
“As long as OPEC stays on track and non-OPEC delivers on their agreed cuts, the market will continue to balance,” said Ole Hansen, head of commodity strategy at Saxo Bank.