Sept. 14 (UPI) -- An expected build in demand as refiners move back into action in the United States helped drive crude oil prices higher for a second day early Thursday.
Crude oil prices spiked Wednesday after the International Energy Agency said the level of oil stocks held in global inventories could move toward, or possibly below, the five-year average "very soon," depending on how quick the U.S. energy sector recovers from Hurricanes Harvey and Irma.
This week, the Organization of Petroleum Exporting Countries reported member states were producing fewer barrels and that global demand was expected to edge higher. The IEA added that overall production was on the decline and the level of stocks for members of the Organization for Economic Cooperation and Development was only slightly above the five-year average.
The U.S. Energy Department said that, as of 2:00 p.m. EDT, Tuesday, four refineries were still closed because of the impact of Hurricane Harvey, which made landfall in late August. This means about 4 percent of total U.S. refining capacity is still shut down. With Florida and the surrounding region recovering from Hurricane Irma, demand strains could compound as fuel service stations struggle to play catch up. U.S. gasoline supplies are at a three-year low.
"This basically means that [refiners] will demand more crude oil as they look to rebuild supply," Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report. "It also means that the normal seasonal slowdown for crude in maintenance season on will be out of kilter."
Demand pressures typically wane after the long Labor Day holiday in the United States as refiners shift to a winter-blend of gasoline and consumers wrap up the busy summer travel season.
The price for Brent crude oil was up 0.82 percent just moments before trading in New York began to $55.61 per barrel, testing a yearly high. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.2 percent to $49.90 per barrel.
Market analysts and reports this week cautioned against reading too much into the post-hurricane rally. If oil prices move much higher, that could trigger stronger production from some of the shale oil basins in the United States. Meanwhile, some traders are looking at the difference between WTI and Brent for clues as to what happens next.
"Once the impact of hurricanes begins to fade, we should see the spread start to narrow, but whether it is Brent falling towards WTI or WTI rising towards Brent, or a combination of both, remains to be seen," Ole Hanson, the head of commodity strategy at Saxo Bank, said in an emailed report.