Oil prices extended gains on Monday that have lifted crude
benchmarks by more than a third from this year's lows, as tightening
supply and an improving global outlook strengthened the sentiment for a
Front-month Brent crude futures were trading at
$39.37 a barrel at 0945 GMT, up 65 cents from their last settlement. In
January, prices fell to levels not seen since 2003.
U.S. West Texas Intermediate (WTI) futures
fetched $36.57 a barrel, up 65 cents from the last close and 40 percent
above February lows.
The May WTI contract settled on Friday at $35.92 a barrel, up 3.91 percent.
While data showed late last week that U.S.
energy firms cut oil rigs for an 11th week in a row to the lowest since
December 2009, as producers slashed costs, there is still a glut of
physical oil that some warned could again weigh on prices.
"The past days' oil price rally was from our
perspective less related to a shift in fundamentals but a recovery of
sentiment," said Norbert Ruecker, head of commodities research with
Julius Baer, adding the bounce did not yet herald a long-term recovery.
China imposed a cap on its energy consumption by
2020, marking the first time the world's second-biggest economy has set
such a target and casting doubt on its consumption growth. The National
People's Congress, or parliament, opens its annual session this week.
Traders said shifting sentiment was lifting
prices as large amounts of short positions were being closed and bets on
rising prices opened.
Ric Spooner, chief market analyst at CMC
Markets, said: "There's a good prospect that Brent could hit $40 ...
(it) could easily do it in the next trading session."