"The market seems to be recognizing that this is a hurricane-altered report, and is waiting to see once we get through this hurricane period", said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.
Oil prices finished higher Monday as investors assessed the impact of Hurricane Irma on energy demand in Florida and Hurricane Harvey's extent of damage to oil refineries on the Gulf Coast. OPEC supply fell by 210,000 barrels, marking the first decline in five months.
Much of that was due to a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption. And U.S. suppliers aren't just capable of seizing the opportunity for a rebound, they're chomping at the bit-low oil prices have put a significant dent in the shale boom, and there's already a backlog (or "fracklog") of drilled but not yet completed wells just waiting for the economics to change.
The news caused oil prices to rise somewhat, with global benchmark Brent crude lifting 0.84 per cent to $54.29 per barrel and US West Texas Intermediate (WTI) rising 0.31 per cent to $48.22 per barrel.
Analysts at Drillinginfo.com said any sustained rally in oil prices would depend on demand strengthening along the lines of the IEA's projections, along with supply cuts.
Oil prices remain near $50/bbl despite nine months of output cuts by a coalition of oil producers led by OPEC and Russian Federation.
Two manatees rescued after Irma drains Florida bay
The Facebook post has been liked more than 63,000 times and has more than 49,000 shares on the social media site. Strangers banded together to help two manatees stranded by Hurricane Irma .
The EIA also said refinery crude runs fell by 394,000 barrels per day. Net, we project a larger - in fact record large - crude inventory build but smaller product draws in the coming week than previously. That's down from an August estimate of 9.91 million barrels.
Rainwater from Hurricane Harvey surrounds oil refinery storage tanks in this aerial photograph taken above Texas City, Texas, U.S., on Wednesday, Aug. 30, 2017.
"In 2018, non-OPEC oil supply is forecast to grow by 1.0 mb/d, following a downward revision to Russian Federation and Kazakhstan, totalling 0.1 mb/d".
Gasoline stockpiles were down 8.4 million barrels for the week, while distillate stockpiles fell 3.2 million barrels, according to the EIA.
These risks come at a time when the oversupply of oil was just beginning to balance out against demand.