Oil Rises on Optimism For Higher Demand, Lower Supply
Oil prices rallied for a third-straight session on signs of higher demand and lower supply, including more bullish forecasts from both the Organization of the Petroleum Exporting Countries and the U.S. government.
OPEC’s new monthly oil-market report said demand for its crude will rise this year as the U.S. produces less and consumes more. It estimates that demand will grow to 29.2 million barrels a day, 100,000 more than a year ago. That reverses a forecast for a 300,000 barrel-a-day decline in demand. It also reduced non-OPEC supply growth estimates by 420,000 barrels a day.
U.S. producers have already cut the number of oil rigs in operation, which is also firing the rally, brokers and analysts said. Operators shut down another 83 last week last week. At 1,140, the number of rigs currently working is at its lowest level since December 2011, and down 29% since a record high as recently as October 2014.
The U.S. Energy Information Administration said Monday that would help slow production growth in the main seven shale plays. In its new Drilling Productivity Report, the agency forecast month-over-month production growth in March 2015 would be slower in six of the seven regions compared with March 2014—with the Utica shale as the only exception.
Light, sweet crude for March delivery, the U.S. benchmark, settled up $1.17, or 2.3%, at $52.86 a barrel on The New York Mercantile Exchange. That is the second highest price this year, putting U.S. oil up 19% from the low it set Jan. 28.
The front-month March contract for Brent crude settled up 54 cents, or 0.9%, to $58.34 a barrel on London’s ICE Futures exchange. It is the highest settlement since Dec. 26, putting the global benchmark up 25% since the low it set Jan. 13.
Both U.S. and Brent prices have climbed in seven of the past eight sessions. Several analysts warned that neither the dwindling rig counts nor the...