MarketWatch SAN FRANCISCO (MarketWatch) — Crude-oil futures on Monday registered their third straight gain, rising by 9% over the three-session period, helped by a further drop in rig counts in the U.S. that suggests a supply glut that has been punishing oil prices over several months may be easing.
That fact as well as data pointing to lower global oil production, including the Organization of the Petroleum Exporting Countries’ move to slash 2015 estimates for non-OPEC oil supples, delivered a lift to crude oil.
On the New York Mercantile Exchange, light, sweet crude-oil futures for delivery in March CLH5, +2.09% tacked on $1.17, or 2.3%, to settle at $52.86 a barrel. Prices already climbed 6.6% over the past two trading sessions.
March Brent crude LCOH5, +0.66% on London’s ICE Futures exchange rose 54 cents, or 0.9%, to end at $58.34 a barrel.
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Oil prices have been up for two consecutive weeks, with Nymex West Texas Intermediate crude-oil gaining 7% last week and ICE Brent crude climbing 9%.
The latest data from oil-field-services company Baker Hughes Inc. BHI, +0.22% released Friday showed the number of rigs drilling for oil in the U.S. fell in the latest week, the ninth weekly loss in a row, to the lowest level in roughly five years.
“The oil rig count has decreased by 342 since the start of the year, which should result in declining U.S. oil production in the second half of the year,” analysts at Commerzbank said in a note.
Still, oil market participants remain divided on whether the rebound in prices can be sustained.
The decline in rig count doesn't immediately translate into lower production, said Tariq Zahir, managing member at Tyche Capital Advisors. “It will take time and until we see either demand dramatically increase or supply come off ... we do think any rally will be sold into and short lived.”
Separately, the Organization of the Petroleum Exporting Countries slashed its 2015 estimate for non-OPEC supply growth by 420,000 barrels a day to 850,000 barrels. The group raised its demand forecast for its oil by 400,000 barrels a day to 29.2 million barrels a day in 2015 and upped its total 2015 world oil consumption figure to 92.32 million barrels a day, from an estimate of 92.30 million barrels in the previous monthly report.
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Meanwhile, a Platts survey released Monday showed OPEC oil production totaled 29.94 million barrels a day in January, down from 30.03 million barrels a day in December. The survey attributed the fall to steep declines in Iraqi and Libyan supply.
“Oil prices are forming a bottom and show strength even in the face of weak Chinese economic data as well as fears surrounding Greece,” said Phil Flynn, senior market analyst at Price Futures Group. “It looks like the oil market is looking beyond current problems and focusing on the potential demand boost from the rash of central bank easing around the globe.”
Nymex reformulated gasoline blendstock for March RBH5, +1.15% — the benchmark gasoline contract — rose 1.9 cents to settle at $1.578 a gallon, while March heating oil HOH5, +1.69% added 3.3 cents to $1.873 a gallon. Natural gas for the same month NGH15, +1.36% picked up almost 2 cents to $2.597 per million British thermal units.