AMSTERDAM, Sept 15 (Reuters): Brent oil prices held steady near five-month highs, and were on track for the highest weekly rise since the end of July on higher demand forecasts and the restart of oil-hungry refineries in the United States (US).
The Organisation of the Petroleum Exporting Countries (OPEC) this week forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its deal with non-OPEC states to cut output is helping tackle a glut.
That was followed by a report by the International Energy Agency (IEA) saying the glut was shrinking thanks to strong European and US demand, as well as production declines in OPEC and non-OPEC countries.
"Prices have now advanced for the last two weeks off increased demand forecasts from both OPEC and the IEA combined with the near-term demand uplift expected as U.S. oil refineries seek to restart operations post Hurricane Harvey," analysts at Panmure Gordon said.
Benchmark Brent crude LCOc1 was up 7.0 cents at $55.54 a barrel at 1117 GMT in a volatile session that stretched from an intra-day low of $54.86 to a high of $55.74 a barrel. The contract was on track for its third straight weekly gain and the highest weekly rise since the end of July.
US West Texas Intermediate crude CLc1 was up 8.0 cents at $49.97 a barrel. The contract was set for a more than 5.0 per cent weekly gain, also its strongest in nearly two months.
Oil investors eyed further impact from increasing crude demand from U.S. oil refineries restarting after hurricane outages.
On Wednesday, 13 of 20 affected US refineries were at or near normal operating rates and another five were restarting or ramping up, according to IHS Markit.
Analysts at HSBC said that despite the US refinery outages, 2017 was set to be an "extremely strong year" for oil demand growth, a key factor underpinning a rise in prices.
"We remain convinced of longer-term upside to crude prices. With the lack of new major project sanctions, we expect conventional non-OPEC supply to start declining post-2018," they said.
They maintained their 2018 and 2019 Brent price assumptions at $65 and $70 a barrel, respectively.
Another report from London adds: A deal by BP to extend oil production-sharing in Azerbaijan by 25 years is profitable at current oil prices even after paying a signing bonus and cutting foreign companies' stake in the project, Chief Executive Bob Dudley said.
The pact between a BP-led consortium and Azerbaijan to continue developing the Azeri-Chirag-Guneshli (ACG) offshore fields until 2050 comes as the oil and gas company prepares to boost production sharply by the end of the decade.
Under the deal, BP and its partners cede part of their stake to Azerbaijan's national energy company SOCAR and pay the government a $3.6 billion signing bonus. BP's stake falls to 30.37 per cent from 35.8 per cent but it will remain the operator.
The initial agreement, signed in 1994, was dubbed by some as "the contract of the century" for its transformative impact on the Azeri economy.
Speaking from Baku, Dudley said in an interview the renewed deal is profitable with oil currently around $55 a barrel and that it remains attractive within BP's portfolio even as crude prices are not expected to rise sharply this decade.
"It is very good, solid economics for everyone involved," the BP CEO told Reuters on Thursday.
"Breakeven is below the current price of oil ... it is competitive in our portfolio, most certainly."
BP, like its peers, has sharply cut spending over the past three years following a drop in oil prices, slashing costs for projects and laying off thousands of employees.
"You can only imagine at a time when oil prices have dropped like they have in recent years that we are very selective about where we make our investments," he said.
The London-based company is on track to start production this year at seven major projects around the world, including the giant Eni-operated Zohr gas field in Egypt.
"We will see all seven projects come on through 2017 and lay the foundation towards 800,000 barrels per day of new production by 2020," Dudley said.