World oil prices recovered strongly this week, reaching 2016 highs as experts forecast an easing to the global supply glut that has weighed heavily on markets for almost two years.
OPEC and the advisory body the International Energy Agency (IEA) both pointed to lower supplies on the horizon and in a week in which the United States revealed an unexpected drop to its commercial crude inventories.
"Prices surged towards the end of this week" following the US stockpiles report, research group Capital Economics said in a note to clients.
"What's more, on Thursday, the IEA decreased its forecast for non-OPEC production and increased its estimates for demand this year."
New York's main oil contract reached USD 47.02 a barrel yesterday -- the highest level since early November.
By today around 1630 GMT, US benchmark West Texas Intermediate for delivery in June stood at USD 46.24 a barrel, compared with USD 43.74 a week earlier.
Brent North Sea crude for July surged to USD 47.78 a barrel from USD 44.43 one week earlier.
After falling at the start of the week,, crude futures began to rally on Tuesday, as traders focused on lingering oil producer shutdowns in Canada and plummeting output in Nigeria.
The market extended gains as the Department of Energy said that US crude stockpiles slid by 3.4 million barrels last week. Analysts' consensus had been for a rise of 750,000 barrels.
"The drawdown may well have been due to the wildfires in Canada (whose)... Main export market is the US," said Fawad Razaqzada, analyst at traders City Index.
Prices rallied further yesterday, with the US benchmark reaching the highest level this year after the International Energy Agency predicted that the crude oversupply would shrink in the second half of 2016.
The IEA forecast that the stubborn oil glut will "shrink dramatically" this year, following wildfires that have disrupted Canada's output and on buoyant Indian demand.
Today saw some profit-taking from the week's strong gains, even as the Organization of Petroleum Exporting Countries said that the global crude glut that has squeezed the market and sent prices plunging over the past year "may be easing" as a result of countries outside the oil producing cartel dropping their production.
The oil market has been rocked by chronic oversupply in recent years, badly hurting producers but translating into lower prices at the petrol pumps for consumers.
Despite the week's gains, the market remains far below the USD 100-a-barrel mark of mid-2014 -- and sank underneath USD 30 earlier this year on the back of abundant supplies.
