Crude futures turned higher after OPEC said its oil output fell in August and as U.S. refiners continued to ramp up following Hurricane Harvey.
U.S. crude futures rose 16 cents, or 0.33%, to $48.23 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 43 cents, or 0.8%, to $54.27 a barrel.
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In its monthly oil report, the Organization of the Exporting Countries said its production fell for the first time since April in a sign that its efforts to rein in the global supply glut are starting to pay off. OPEC said Tuesday that its output edged lower by 0.24% to 32.76 million barrels a day in August. It also said demand will be higher than it previously thought.
OPEC and 10 other producers including Russia first agreed late last year to cut about 2% of global oil production to drain a global oversupply that has kept prices depressed. But the oil cartel has struggled to raise oil prices amid an oil production boom in the U.S.
"OPEC obviously thinks they're doing a good job and it's pulling together what they wanted to," said Donald Morton, senior vice president of Herbert J. Sims & Co., who oversees an energy trading desk.
Libyan production -- which has undercut OPEC's efforts -- fell significantly by 112,300 barrels in August, to 890,000 barrels a day, a result of pipeline closures and disruptions at its oil fields, the report showed.
Saudi Arabia -- OPEC's largest member and the world's biggest crude exporter -- has been debating whether to extend the cartel's production cutting deal after it expires next year.
In addition, the U.S. Energy Information Administration said in its monthly Short Term Energy Outlook that U.S. production fell 40,000 barrels a day in August from July. The EIA revised its estimates for production this year and next downward, which it said partially reflects the impact of Hurricane Harvey. The EIA estimates that that U.S. output will average 9.3 million barrels a day this year and an all-time high of 9.8 million barrels a day next year.
Hurricane Harvey disrupted refinery production in Texas last month -- one reason U.S. crude futures have been lower than the global benchmark. More recently Hurricane Irma left more than seven million homes without electricity in Florida.
Analysts anticipate the power outages and the evacuation of the region may damp consumer appetite for crude.
"The market is assessing what is happening after the two hurricanes and there is concern that demand is down in Florida," said Miswin Mahesh, an oil market analyst at Energy Aspects. "There is also a lot of talk about whether OPEC is going to extend its deal or not and the market is weighing a lot of outcomes."
Markets on Wednesday morning will be watching for weekly U.S. government data on oil inventories, expected to show higher crude supplies but lower fuel stockpiles. The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 6.2-million-barrel increase in crude supplies, a 7.9-million-barrel fall in gasoline stocks and a 1.8-million-barrel decrease in distillate inventories, according to a market participant.
Gasoline futures rose 2.18 cents, or 1.33%, to $1.653 a gallon, breaking a six-session losing streak Diesel futures edged lower by 0.12% to $1.7406 a gallon.
Christopher Alessi contributed to this article.
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(END) Dow Jones Newswires
September 12, 2017 17:53 ET (21:53 GMT)
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