AMSTERDAM, Oct 18 (Reuters) - Brent oil prices rose to a three-week high on Wednesday as weekly USA crude inventories are expected to have fallen steeply and geopolitical tensions around oil-rich Iraq and Iran raised risk premiums.
With supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) tightening the market, analysts have been raising their oil price forecasts.
Brent crude futures were at $57.
The fighting in Iraq, the second-largest producer within the OPEC oil cartel, has kept oil prices near their highest levels in three weeks, and on Wednesday morning, Brent crude was up 0.7% at $58.30 a barrel, while Nymex WTI was 0.4% higher at $52.09.
MSCI's broadest index of Asia-Pacific shares outside Japan gained for a fifth day running to its highest level since late 2007. There were also reports that Kurds had shut down some 350,000 barrels per day (bpd) of production from major fields Bai Hassan and Avana due to security concerns.
"The possibility of genuine shortage understandably supports oil prices", said Tamas Varga, an analyst at oil market data company PVM.
The escalating fighting in Iraq has spooked markets as it adds to rising tensions between the United States and Iran.
Some 1 million bpd of oil was cut from global markets during the previous round of sanctions against Iran. President Donald Trump last week refused to certify Iran's compliance with a 2015 global agreement to curb the Islamic Republic's nuclear program in exchange for economic sanctions relief.
"Oil and geopolitics are very much interlinked", Fatih Birol, executive director of the International Energy Agency, told Reuters. It may take time to break above; meanwhile, crude oil prices could travel between $50 to $52.30 levels.
Birol said the rate of compliance by OPEC and its partners in their targeted cutting of about 1.8 million barrels per day between January this year and March 2018 was about 86 percent.
OPEC and 10 producers outside the cartel, including Russian Federation, first agreed late previous year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices.
The euro slumped 0.2 percent to $1.1798, while the dollar index rose 0.16 percent as investors repositioned following disappointing inflation data on Friday that sent the greenback lower.
Elsewhere, copper rose to $7,134.5 a tonne, hitting a three-year high, having jumped 3.7 percent on Monday, its biggest gain in about 10 months, helped by prospects of brisk economic growth.
US inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.