The upturn in oil prices come as the United States' sanctions squeezed Iranian crude exports and after the U.S. crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.
Crude oil storage tanks are seen from above at the oil hub in Cushing, Oklahoma, March 24, 2016.
The latest forecast by IEA is that production by non-OPEC members will grow by over 2 million barrels daily during 2018 and by 1.8 million bpd during 2019, due to the non-stop growth in record output by the U.S. WTI futures gained 2.5 percent in the previous session.
Concerns over supply from the country have driven Middle East crude benchmarks to their highest in more than a year.
"A drawdown in crude oil inventories isn't very comforting when you're going to lose a lot of Iranian crude in a couple of weeks", said Phil Flynn, an analyst at Price Futures Group.
The U.S. Energy Information Administration (EIA) forecast on Tuesday that U.S. crude oil production will average 10.7 million barrels per day in 2018, up from 9.4 million barrels per day in 2017, and will average 11.5 million barrels per day in 2019.
US nationwide crude inventories may have fallen 2.25 MMbbl last week, according to a Bloomberg survey of analysts ahead of government data due to be released on Wednesday.
Brent crude futures rose $1.67 to $79.04 a barrel, a 2.2 per cent gain.
But with the crisis in Venezuela showing no sign of abating, and with new USA sanctions on Iran's oil industry set to come into force on November 4, other producers may have to ramp up production even further if they want to limit the impact on the market. However, the drop has only seen exports fall to near March 2016 levels, when the US was not pursuing a sanctions policy against Iran and the Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), was in effect. In August, India imported about 5.23 lakh bpd of oil from Iran, its traditional market, down 32% over a month earlier.
"But we are clear that these are commercial decisions-dependent on how competitively oil is priced and on the requirements of our refineries", said the official. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.
"It is related to the fact that not all the countries have managed to restore their market and production", he said, referring to outages and falling production in Mexico and Venezuela.
Iraq, OPEC's 2d-greatest producer which noticed method-file production in August at four.65 million bpd, is at the moment witnessing violent protests in and round Basra, which hosts the bulk of its oil production facilities and its greatest deepwater port. Demonstrators receive blocked roads and threatened to close down oil facilities in boom in opposition to failed speak products and providers, unemployment and political corruption.
Meanwhile, Hurricane Florence is set to park above the Carolinas coastline, threatening fuel markets along the US East Coast.
Distillate stockpiles, which include diesel and heating oil, rose by 6.2 million barrels, versus expectations for a 1.4 million-barrel increase, the EIA data showed.