Oil prices have risen following a temporary dip as the International Energy Agency (IEA) announced international oil markets have already started tightening even before production cuts by OPEC and non-OPEC countries materialises.

Brent crude improved by 27 cents to touch $54.19 a barrel while US West Texas Intermediate crude oil grew 25 cents to reach $51.33 per barrel, reported Reuters.

Since the beginning of this year, oil prices have been fluctuating amid hopes of an end to global oversupply and concerns due to reports of increase in US shale production.

IEA reported that commercial oil inventories in the Europe and Americas decreased for consecutive four months in November, forecasting another fall in December.

"Since the beginning of this year, oil prices have been fluctuating amid hopes of an end to global oversupply."

The agency also stated that it would be too soon to analyse the OPEC’s level of compliance with production cuts announced last year.

PVM Oil Associates analyst Tamas Varga was quoted by Reuters as saying: “Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive.”

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By GlobalData

The investors are waiting for the release of the weekly inventory data by the US Energy Information Administration (EIA), which will provide official figures of the country’s crude stocks.

Earlier, American Petroleum Institute (API) data stated that that US crude inventory fell by 5.04 million barrels in the week ending 13 January.