LONDON: Oil prices held near six-month peaks on Thursday as the IEA forecast a sharp drop in the supply glut, and following a surprise fall in US crude reserves.
Around 1130 GMT, European benchmark Brent North Sea crude for July gained 26 cents to $47.86 a barrel compared with Wednesday's close.
New York's West Texas Intermediate for delivery in June won 42 cents to stand at $46.65 a barrel, after soaring the previous day to its highest closing level since November 2015.
The International Energy Agency (IEA) forecast that the stubborn oil glut will "shrink dramatically" later this year, following wildfires that have disrupted Canada's output and on buoyant Indian demand.
The IEA's monthly report was published one day after news of a drawdown in US oil inventories that signalled strong demand in the world's top oil consumer -- and sent prices racing.
The "surprise draw (fall) in US crude oil inventories was very supportive for crude futures", Sucden brokers analyst Kash Kamal told AFP.
"That positive momentum has carried on today with the IEA report.
"The market fundamentals do not seem to be as dire as previously thought: stronger demand from India, despite a faster-than-expected increase in Iranian output, has been particularly supportive today."
Demand for oil worldwide is set to grow at a "solid" rate in 2016, with India the "star performer" after making up nearly 30 percent of the global increase in demand in the first quarter of the year, the IEA said.
"This provides further support for the argument that India is taking over from the China as the main growth market for oil," the 29-nation energy watchdog said in its closely-watched monthly report.
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 this week's gains, the market remains far below the $100-a-barrel mark of mid-2014 -- and sank underneath $30 earlier this year on the back of abundant supplies.
In Canada, devastating wildfires near Fort McMurray forced a shutdown of 1.2 million barrels a day (mb/d) of production early this month.
The IEA said the events in Canada, however, had not sent oil prices sharply higher, as would have been expected some years ago, with crude having shown little reaction amid overall improved market sentiment.
- US stockpiles slide -
Crude futures had surged on Wednesday after the US government's Department of Energy (DoE) said inventories slid 3.4 million barrels last week. That confounded market expectations for an increase.
"Data yesterday -- which showed a surprise drawdown in US crude oil stockpiles -- saw prices climb," said analyst Dorian Lucas at British-based energy consultancy Inenco.
"Today's price action has acted to maintain yesterday's gains and consolidate near to six-month highs," Lucas told AFP.
The DoE report also said Wednesday that US oil production fell, providing hope to a market burdened by a stubborn global supply glut.
And supplies of gasoline (petrol) and distillates, such as diesel and heating fuel, slid by more than expected.
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