Oil rallies for third day after OPEC sees greater crude demand

Mon Feb 9, 2015 4:08pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Oil jumped 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 producer group.

The Organization of the Petroleum Exporting Countries forecast that demand for OPEC oil will average 29.21 million barrels per day (bpd) in 2015, up 430,000 bpd from its previous forecast. The group also slashed its outlook for crude supply growth in non-OPEC countries.

Oil prices have been trying to find a floor after a brutal selloff that wiped out over half of the market's value since June. The rebound came after weeks of decline in the U.S. oil rig count, which hit three-year lows last week.

While most traders cited short-covering as prices continued to advance on Monday from near six-year lows, some noted options expiry in Brent's front-month contract and a weaker dollar .DXY as other supportive factors.

Standard & Poors' negative outlook for Saudi Arabia due to the decline in oil prices also led to speculation that the No. 1 crude exporter might want the market to recover after its freefall in recent months.

Benchmark Brent oil futures LCOc1 settled up 54 cents, or nearly 1 percent, at $58.34 a barrel, after rallying to $59.61 at one point.

U.S. crude futures CLc1 finished up $1.17, or 2.3 percent, at $52.86 after a session high at $53.99.

Brent's premium to U.S. crude CL-LCO1=R narrowed for the first time in five sessions as U.S. futures outperformed on expectations that the oversupply might be resolved sooner than thought due to the falling rig count.   Continued...

A drop of diesel is seen at the tip of a nozzle after a fuel station customer fills her car's tank in Sint Pieters Leeuw December 5, 2014. REUTERS/Yves Herman