USA crude settled up more than 1% on Monday, paring some of its huge discount to global oil benchmark Brent, as Hurricane Irma's initial damage on the domestic oil industry look more contained than thought. Irma made a landfall in Florida on Sunday and is barreling through the state to the northwest. It gradually lost strength and weakened to a tropical storm by Monday morning as it headed towards Georgia.
Production by the 14 members of the Organization of the Petroleum Exporting Countries came to 32.755 millions of barrels per day (bpd) last month after 32.834 in July, it said in a report, citing secondary sources. U.S. West Texas Intermediate (WTI) crude futures rose 0.70% to $47.81 a barrel.
OPEC and a number of other producers including Russian Federation agreed in May to extend production cuts, originally agreed past year, into 2018 to ease a global supply glut and support the price of crude.
"Crude oil output increased in Nigeria, while production showed declines in Libya, Gabon, Venezuela and Iraq", the report said.
The price move higher also "reflects a little more confidence that the refiners are recovering", said James Williams, president of energy researcher WTRG Economics near Russellville Still, the oil market may continue to chop around as there is some lingering uncertainty as to how much crude is actually being processed by these refiners, he said.
The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $50 to $54 range as the effort to drain global inventories has taken longer than expected.
The market is also watching closely for US inventories data in the wake of recent storms.
The latest inventories data will come back into focus with the API data due for release after Tuesday's NY close with the latest EIA data on Wednesday.
"Irma will have a negative impact on oil demand but not on oil production or processing", Goldman analysts said in a note, Oil Price reported. A quarter of US refining capacity to be taken off-line due to the hurricane, sapping demand.
This is 0.77 million barrels per day lower than in October 2016, when the countries-participants of the agreement (excluding beneficiaries) produced 30.769 million barrels. An extension of at least three more months is being discussed before the cartel meets again in November.