In the USA, refineries are set to process more crude as they come back online after Hurricane Harvey led gasoline inventories to tumble the most on record last week.
Futures gained 2.2 per cent in NY.
The assessment echoed a report by the Organization of Petroleum Exporting Countries forecasting higher demand for its oil in 2018 and pointing to signs of a tighter global market.
The IEA's stronger demand estimate have helped lift oil prices, Matthew Beck, managing director of a US$8 billion (RM33.6 billion) oil and natural gas bond and private-equity portfolio at John Hancock Financial Services Inc in Boston, said by telephone.
Crude oil production that was shuttered in the wake of Harvey have began to return to service, with output rising to 9.4 million barrels per day in the week to September 8 from 8.8 million bpd a week earlier.
The 12 members of OPEC bound by a supply-cutting pact raised their compliance to 82 percent in August from 75 percent in July.
Phil Flynn, senior market analyst at Price Futures Group, said the weekly drop was the largest in history and that the storms were to blame. "There's more of a bullish mood out there".
The West Texas Intermediate for October delivery was up 1.07 USA dollars to settle at 49.30 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery rose 0.89 dollar to close at 55.16 dollars a barrel on the London ICE Futures Exchange. Total volume traded was about 13% above the 100-day average.
Brent for November settlement increased 89 cents to end the session at US$55.16 on the London-based ICE Futures Europe exchange., the highest level since April. The global benchmark crude traded at a premium of $4.77 to WTI.
Oil tallied a third straight gain Wednesday, with USA prices settling at a five-week high and Brent at its highest since April, buoyed by a report from the International Energy Agency that showed global crude production fell for the first time in four months in August. "And yet this is hardly likely to happen", it said, saying Opec states Libya and Nigeria had not agreed to production cuts. "Depending on the pace of recovery for the USA refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level".
Earlier Wednesday, the EIA reported that U.S. crude stocks rose by 5.9 million barrels for the week ended September 8 while domestic United States crude output jumped by 572,000 barrels a day to 9.353 million barrels as more wells came back on line after the storm.
Crude oil futures continued to surge Wednesday after government data showed a massive drop in gasoline stockpiles. The oil market has been drowning in too much supply for three years, but at least for products (gasoline, diesel), inventories are getting close to average levels.
"Storage data is going to continue to be choppy, as it was this week, for the next few weeks", Beck said.
Just over half of all U.S. refinery capacity is located in the U.S. Gulf Coast (defined as Petroleum Administration for Defense District 3).