Oil rises on signs of tightening market, but economic worries weigh
Oil prices rose on Monday, extending sharp rises from the end of last week following a decline in U.S. inventories and drilling, while outages and hopes that exporters could freeze output boosted international prices.
Analysts also said that global oil demand could accelerate, helping to tighten a market that has suffered from ballooning oversupply since mid-2014, although weak Asian economic data weighed on markets.
U.S. crude futures rose above $40 a barrel in early trading but eased back to $39.81 a barrel by 0147 GMT, still up 9 cents from their last close.
International benchmark Brent was up 9 cents at $42.03 a barrel.
U.S. energy firms cut oil rigs for a third week in a row to the lowest level since November 2009 as energy firms slash spending. Drillers cut 8 oil rigs in the week to April 8, bringing the total rig count down to 354.
Brent was lifted by production outages in the North Sea and West Africa, and by hopes that a meeting of exporters planned for April 17 would lead to an agreement to rein in ballooning overproduction that sees at least 1 million barrels per day (bpd) pumped in excess of demand.
Analysts at Bernstein said on Monday they expected global oil demand to grow at a mean annual rate of 1.4 percent between 2016 and 2020, compared with annual growth of 1.1 percent over the past decade and an International Energy Agency estimate for demand to grow by 1.3 percent over the next 5 years.
Bernstein said it expected the market to rebalance in the second half of 2016 due to its outlook for stronger than expected demand.