Oil rallies for 3rd day after OPEC sees greater crude demand
OPEC forecast demand for its oil will average 29.21 million barrels per day (bpd) in 2015
Oil rose for a third straight session on Monday as OPEC forecast greater demand for crude this year than previously thought and projected less supply from countries outside the group.
The Organization of the Petroleum Exporting Countries forecast demand for its oil will average 29.21 million barrels per day (bpd) in 2015, up 430,000 bpd from its previous forecast, while slashing its outlook for crude supply growth in non-OPEC countries.
Data last week showing the U.S. oil rig count at a three-year low also bolstered prices, which were attempting to find a floor after a brutal selloff in crude that wiped out over half of the market's value since June.
Benchmark Brent oil futures were up 35 cents, or half a percent, at $58.15 a barrel by 11:40 a.m. EST (1640 GMT), after revisiting Friday’s one-week peak of $59.06.
U.S. crude futures rose $1.30, or almost 3 percent, to $52.99 after climbing to $53.40 earlier.
The U.S. front-month contract was at its narrowest discount in more than two weeks to the second month as strong gains in oil for prompt delivery reduced some of "contango" that made it profitable to store crude for future delivery.
Oil services firm Genscape estimated a smaller-than-expected build of 724,000 barrels last week in the Cushing, Oklahoma delivery point for U.S. crude futures, adding to the bullish sentiment, sources said.
Both U.S. crude and Brent have gained nearly 20 percent since a Jan. 29 rebound inspired by better confidence in the crude supply outlook following a seven-month-long selloff that halved prices.
Some traders were pessimistic though that the rally will last.
"It was mainly hedge fund, speculator driven and smacks of price-overshooting," said Anuraag Shah, portfolio manager at the Los Angeles-based Tusker Investment Fund, which manages nearly $100 million across commodities.
"We are just undergoing consolidation and technical short-covering, reaching maybe up to $56 to $59" in U.S. crude, he added.
Tariz Zahir, managing member at New York's Tyche Capital Advisors, agreed. "We are not turning long in any way. All rallies, we feel, will be sold into," he said.
Citigroup said in a note that U.S. crude could fall well below $40, "perhaps as low as the $20 range for a while.”