Oil markets firm on rising refinery demand, falling U.S. rig count

Oil markets were firm on Monday and remained near multi-month highs reached late last week as the count of U.S. rigs drilling for new production fell and refineries continued to start up after getting knocked out by Hurricane Harvey.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $49.83 barrel at 0115 GMT, 6 cents below their last settlement, but still close to the more than three month high of over $50 per barrel briefly reached late last week.

Brent crude futures LCOc1, the benchmark for oil prices outside the United States, were at $55.60 a barrel, down 2 cents but not far off the almost five-month high of $55.99 from late last week.

“Demand forecasts from OPEC and IEA... continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.

Oil refineries across the Gulf of Mexico and the Caribbean were restarting after being shut due to hurricanes Harvey and Irma, which battered the region in the past three weeks.

The latest was Royal Dutch Shell (RDSa.L) Deer Park’s 325,700-barrel-per-day joint-venture in Texas, which was restarting on Sunday.

“This comes as signs emerge of stalling growth in the U.S. shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.

U.S. energy firms cut seven oil rigs in the week to Sept. 15, bringing the total count down to 749, the fewest since June, Baker Hughes energy services firm said on Friday. RIG-OL-USA-BHI

Despite these signs of a tightening market, analysts warned that the distortions of the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals.

“This week’s crude inventories data will almost certainly still show the distortions of Harvey and Irma and significant increases may be looked at by traders as outlier data,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.