Oil was on its highest on Monday after quite some time as demand from refineries quadrupled and total number of US rigs were down by a substantial number.
U.S. West Texas Intermediate (WTI) crude futures were at $50.01 per barrel at 0547 GMT, and close to the more than three-month high of $50.50 reached last Thursday.
Brent crude futures, benchmark for oil prices outside the United States, were at $55.71 a barrel, up 9 cents and not far from the almost five-month high of $55.99 touched on Thursday.
Earlier, demand forecasts were raised by both OPEC and IEA, citing the demand is expected to rise in coming future as number of rigs decrease and output slashes continue to occur throughout the oil producing countries. The industry analysts hint that the glut prevalent in the market for the last few years is slowly but surely shrinking due to numerous reasons including; declining investments in oil industry, rig count across decline as profits become thinner, hurricanes prompts demand across US from refineries.
OPEC has long been in agreement with members and non-members to decrease production to help raise prices for oil in the international markets. With agreement from almost all of the oil producing and non-producing countries, Saudi Arabia and others have curbed output by significant amounts during last year.
Furthermore, the shale boom took away much thunder from oil prices as investments increased substantially in the exploration of sea beds and other shale deposits across US. However, as prices went spiraling down the profits continue to run thin in the international markets. However, US energy exploration companies have cut the number of rigs across the US during the last few months, bringing the total number of rigs in US to 749 from 756.
Despite signs of a tightening market, analysts warned that distortions from the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals. Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to Sept. 12, the U.S. Commodity Futures Trading Commission reported on Friday.
