LONDON: Oil prices edged higher for a third day on Wednesday as OPEC said the market was gradually tightening after years of oversupply, but the 2018 outlook was less certain.
Brent crude futures, the international benchmark for oil prices, were trading at $56.73 per barrel at 1315 GMT, up 12 cents. Brent closed 2 percent higher the previous day.
US West Texas Intermediate (WTI) crude futures were at $51.04 a barrel, also up 12 cents from their last settlement. WTI also closed 2 percent higher on Tuesday.
On Wednesday, the Organization of the Petroleum Exporting Countries forecast higher demand for its oil in 2018 and said its production-cutting deal with rival producers was clearing the glut after more than three years of excess.
"OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels," the group said.
OPEC, along with other producers including Russia, agreed to cut output by 1.8 million barrels per day (bpd) through March 2018 to balance the market.
Barclays had raised its price outlook for the fourth quarter of 2018 and the first quarter of 2017.
"We have finally shifted fundamentally from build mode to draw mode," Barclays said in a note.
Saudi Arabia trimmed crude supplies to its biggest buyers in Asia, sources told Reuters, a sign that it is meeting its cut commitment.
Bullish forecasts from the International Monetary Fund also supported prices. The IMF projected global economic growth of 3.6 percent this year and 3.7 percent for 2018, an indication that fuel demand would rise.
Still, longer-term indications were less rosy. Barclays said it expected "a return to build mode next year", while PVM's Stephen Brennock said the IMF viewed the economic recovery as being "on thin ice".
"Several market participants will have taken solace from yesterday's rally but the jury is out on whether it has the legs to go the distance," Brennock wrote.
The United States is not participating in the supply cut, and its output has risen 10 percent this year to more than 9.5 million bpd.
Speaking at the Reuters Global Commodities Summit, Vitol chief Ian Taylor said US output would climb by another 0.5 million to 0.6 million bpd next year before flattening.
Later on Wednesday, the American Petroleum Institute will release weekly US fuel inventory data, followed by official figures from the US Department of Energy on Thursday.
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