Oil prices climb for 2nd day as OPEC report shows production drop

Marathon Petroleum Corp. oil storage tanks sit at a terminal in the Ybor Channel ahead of Hurricane Irma in Tampa Florida U.S. Sept. 9 2017

Saudi Arabia open to another OPEC cuts extension

Monday's gains came as Hurricane Irma struck the US southeast with less force than once feared, easing worries that energy demand would be hit hard. Irma made a landfall in Florida on Sunday and is barreling through the state to the northwest.

Irma hit Florida on Sunday morning as a risky Category 4 storm, the second highest level on the five-step Saffir-Simpson scale, but by afternoon it weakened to a Category 2 with maximum sustained winds of 110 miles per hour (177 kph).

U.S. West Texas Intermediate (WTI) was up 33 cents or 0.7 percent to $48.40 a barrel.

The uptick in sentiment on oil prices comes against concerns that falling US oil demand could weigh on crude futures in the wake of Hurricane Irma which made landfall in the USA over the weekend.

Losses were capped by weekend talks between Saudi Arabia's energy minister and counterparts over a possible extension to a pact to cut global oil supplies beyond next March.

OPEC and its partners chose to extend its production cuts till March 2018 in Vienna on May 25, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry. The American Petroleum Institute (API) will release its stocks data on Tuesday while the U.S. Department of Energy's Energy Information Administration (EIA) will release its figures on Wednesday. The post-storm recovery will likely bring oil demand to a higher level, gradually offsetting the negative impact, Goldman Sachs said.

OPEC said inventories were falling and that an increase in the price of Brent crude for immediate delivery to a premium to that for later supplies raised hopes that a rebalancing is under way. Even if stocks fall by half a million barrels per day (b/d), they will still be about 60 million barrels above the five-year average by March 2018, according to the Paris-based agency.

Aside from total US crude stockpiles, oil centered in the Cushing, Oklahoma hub, which stores supply meant for delivery against WTI contracts, has abeen rising. Pipelines from Cushing run to key refineries in the U.S. Gulf Coast of Mexico and the hub is an important indicator of crude demand.

Libyan production-which has undercut OPEC's efforts-fell significantly by 112,300 barrels in August, to 890,000 barrels a day, a result of pipeline closures and disruptions at its oil fields, the report showed. An extension of at least three more months is being discussed before the cartel meets again in November.

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