OPEC raised its forecasts for global oil demand growth in 2017 and 2018, saying consumption would rise by 1.35 million bpd next year, 70,000 bpd more than previously thought.
US light crude rose 77 cents to a high of $50.07 before easing to trade around $49.95, up 65 cents.
The IEA revised upwards its estimate for demand growth in 2017 by 100,000 barrels a day (bpd) to 1.6m bpd, or 1.7%.
"Instead, the focus should be on the near-term outlook". But if product inventories get back to normal, refineries will have to work harder to ensure that there is enough gasoline and diesel to meet consumer demand.
London's blue chip index ended the day lower by 0.28% or 20.99 points at 7,379.7 points, while others like the French Cac 40 and German Dax closed higher by 0.16% and 0.23%, respectively.
"Stronger demand and supply restrictions from OPEC and Russian Federation are the main reasons for the oil price upsurge", said Forex.com analyst Fawad Razaqzada.
Two months ago after a ministerial committee meeting monitoring compliance with the deal, made up of officials from OPEC and those outside the cartel such as Russian Federation said that Nigeria has voluntarily agreed to join the OPEC imitative of production curb and will put a cap on country's production at 1.8 million barrels per day. "The surplus over the five-year average fell to 190 million barrels", the report said.
The oil market has been oversupplied for too long despite OPEC cuts in production but the IEA now sees a sense of rebalance reappearing, even as inventories remain high.
The IEA the impact of Hurricane Harvey, which struck the US Gulf Coast at the end of August where significant US refinery and export operations are concentrated, on oil markets should be brief.
Global oil supplies have hit a snag in recent weeks as Hurricane Harvey limited output in the USA and declining activity in the Middle East helped the Organization of Petroleum Exporting Countries keep to a previous deal to limit production.
In the U.S., hurricane-driven refinery outages spurred fuel distributors to pull a record amount of gasoline from storage tanks to cope with shortages last week, government data showed.
SEOUL, Sept 15 (Reuters) - South Korea's imports of Iranian crude oil increased 40.2 percent in August from the same month a year earlier, with its refiners snapping up competitively priced cargoes from the Middle Eastern nation. In fact, some analysts warned everyone not to get too excited, not least because oil supply is still expected to grow by quite a bit through next year.
Global oil supply meanwhile fell in August by 720,000 b/d on unplanned outages and scheduled maintenance, mainly from countries outside of the Opec cartel, the IEA said.